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CIO Leadership Strategies For Effective Digitisation

by Sreeram Iyer, Chief Operating Officer, Institutional Banking, ANZ Banking Group January-2018

In the boarder banking context, recent mind-boggling advancements in Technology have been hugely impressive. However, on the flip side, has been a reduction in profitability of banks, with the Asian banks’ average Return on Equity trailing that all other regions except for Europe as of 2016. Facing a persistent margin compression chal­lenge just to maintain their RoEs, banks have started adopting new digital tools (e.g. Machine Learning, Big Data, Robotic Process Automation (RPA), etc.), and can now make a meaningful dent in the Cost Income ratios of banks to improve their returns.

So if you are a CIO, what is your role in driving Dig­itisation as a Leader?

I would like to share three key lessons based on expe­rience and exposure in the recent past:

  • Firstly, it is all about Strategy and alignment. Not strategy on standalone  digitisation but strategy of the Business to transform itself with the Customer in mind. The CIO needs to play a deep role in evolving this strat­egy to improve returns (in the case of banks). Digitisa­tion cannot and should not be designed to live in its own right. The questions that come to my mind are: How aware and engaged is the Board on global trends in Digitisation?  Does the Company have a cohesive business strategy with alignment from all individual business unit? Are the elements of Digital Transformation articulated well enough so that all employees will understand and able to speak on it confidently? Are Investment Dollars prioritised to align with the above?
  • The second most important element is organisational Culture. Digital transformation is about shedding the past, injecting rapid change, designing customer-led improvements and engaging with all staff in a positive environment, despite elimination of several roles in most cases. ‘Language’ is an important part of culture change. For example, CIOs need to carefully craft their commu­nication e.g. where they think about ‘Training’ as a cost or as an investment, Technology as a Service or as a cost centre, DevOps as the latest jargon or as a new way of working. One of the best reflec­tions I once learned is that old tech­nology platforms are not ‘legacy’ systems as often referenced. It is our brain which determines our legacy thinking. A key question on Cultur­al change depends on how many of your staff move from ‘Awareness’ to ‘Interest’ to ‘Adoption’.
  • It is only after the above two di­mensions are effectively dealt with, can CIOs then talk about ‘Technology’, new platforms and digital tool kits to usher in digital transformation. Not earlier. This will require bold new ways of getting things done and will need acknowledgment that speed can be a competitive advantage. CIOs will have to design new mechanisms of management processes where digital governance cuts across different business units, yet offers flexibility to each unit to adopt pace. CIOs have to reflect on what technology assets sit at an enterprise level and may need ‘protection’ while others at a unit level may need to be discarded. Funding and investments have to match digi­tal ambitions, and CIOs play a huge part in this exercise.

These Leadership challenges require sustained ef­fort from the top-of-the-house and by CIOs. It may be tempting to declare victory too soon based on some front-end customer channel experience while the rest of the organisation has not changed culturally or where processes have not been transformed. Sustaining requires energy, commu­nicating wins and rewarding behav­iours. 

Technology changes every Mon­day morning. Therefore, Organisa­tional support for Lifelong Learning is extremely important – for business leaders & their staff alike. One of the notions I have recently encountered is that Leadership is too important to be left to the bosses. Continuing self-education is a great example where, in some organizations the 50-yearolds are charged with deciding what the 20-somethings should be learning! Actually, in this increasingly digital age, the reverse holds true. The question for CIOs is to ask if the or­ganisational hierarchy is an enabler or is it a blocker for self-learning. 

We learned along the way that Data is more impor­tant than Platforms. CIOs can and should shift their perspectives to Data as much as to new age technolo­gies. Cleaning all possible Data inputs is another key aspect for successful digitisation initiatives. What we have realised in the course of our own efforts –and it is no surprise really - is that robots demand clean data to be effective – so a lot of the work involves streamlining the process, so that the outcomes exceed expectations. 

CIOs are busy trying to figure out implications and opportunities of Distributed Ledgers. Actually, from a cultural standpoint, I read that Distributed Leader­ship is more important than Distributed Ledgers. The traditional attributes of Company Leadership models over the last several decades, such as hierarchical power, corner offices, fancy titles, authority of position and so forth, will soon make way for what may be called ‘Dis­tributed Leadership”. This pushes leadership at all levels because, unlike in the past, knowledge is now distrib­uted, not concentrated. As a CIO, how you enable this change is a tough challenge.

To summarize, I am firmly convinced that the ex­ternal context of banks will mean that CIOs have an even larger role to play in leading digital change. Clear­ly, there are many different ways of doing so, and I have shared the three main approaches which could be adopted to bring about the much-needed change: Stra­tegic alignment, Cultural change and prioritised invest­ments in Digital tools.