There's an old joke that CIO stands for Career Is Over. The idea, according to the website careerisover.com, is that "any IT leader being promoted to the top technology job reaches a glass ceiling. While the CIO might run IT, they'll never become an accepted part of the top table or a chief executive. Hence, Career is Over."
The joke has made less sense over time as the perception of CIOs has risen. Kevin Kabat, president and CEO of Fifth Third Bancorp in Cincinnati, is an example. He was chief information officer at Old Kent Financial Corp., which merged with Fifth Third in 2001, and managed to keep climbing the career ladder at the combined institution without completely losing the geek mind-set. "I have a high regard and appreciation for our tech agenda," Kabat says.
Kabat's former-CIO status and his attitude toward technology give him credentials as a tech-savvy CEO, as some of his peers attest.
"Leadership and more importantly a grasp of the value of not just IT but also operations" are characteristics of CEOs who get technology, says John Beran, former CIO of Comerica. "These are not individuals that look at the work of a CIO as a necessary evil. They understand it has enablement capabilities and value if managed correctly."
When Beran started at Comerica, his first boss was CEO Gene Miller. "Gene really got it when it came to IT and what IT could and should do for an organization," Beran recalls. "He brought me in at a high level and had me report to him. At one point, the management of Comerica was five high-ranking individuals, and I was one of them."
Such CEOs are curious about technology; they're not apt to just say "Don't bother me with it," Beran says. "They're interested in learning about it as much as they are other parts of the business."
CIO at the Head Table
The smartest move a CEO can make technologywise, Beran says, is to hire or promote a CIO to the highest level of the company and have that person report to the CEO, as Miller did at Comerica.
At the $117 billion-asset Fifth Third Bank, CIO Joe Robinson "is at the table from day one," Kabat says. Kabat and Robinson meet often to discuss what's next and where the bank is going and Robinson is part of a team that presents a plan of strategic initiatives and expectations each year.
Four years ago, First Horizon had no CIO (there was a chief technology officer who reported to the acting chief operating officer). CEO Bryan Jordan elevated the top technology position to CIO and brought in Bruce Livesay, with whom he had worked at Regions Bank.
"My experience has been that every business solution somewhere, somehow has a technology component to it," Jordan says. "The CIO needed to be a full partner with the business units. If you ever separate the two processes, you're going to have a lot more problems. Bruce and his team are much more effective, in my view, because he is at the table day in day out as we're talking about where we're trying to go from a strategic standpoint."
"You see the more progressive banks elevating that [CIO] role up," Livesay says. "In my case, I have a seat on the executive committee, I'm on the same level as all the other folks that report directly to the CEO and that is a statement about the role technology plays in the company."
Such CEO/CIO partnerships are relatively rare. A survey of 344 chief financial officers and other senior financial executives conducted by the Financial Executives Research Foundation and Financial Executives International showed that only 33% of IT organizations report directly to the CEO; 42% report to the CFO. Similarly, a recent Gartner study found that CFOs are making 26% of IT spending decisions and CIOs are authorizing only 5%. Most experts agree that the chief technology executive should be answerable to the CEO rather than the top bean counter.
The exact title or acronym of the technology chief is not that critical, Beran says, as long as an executive responsible for technology is in the C-suite. At some banks, including BB&T and North Jersey Community Bank, the COO rather than a CIO oversees technology.
In his days at Comerica, "I was a CIO, but I really operated more as a COO," Beran says. "We didn't have a COO, but my responsibilities at the bank besides information technology included operations — check processing, wire transfer, ACH, payments, security, real estate, loan operations. It went way beyond the CIO role."
Some CIOs, including Joe Robinson at Fifth Third Bank and Livesay at First Horizon, perform the COO functions Beran describes. In addition to IT, Robinson is responsible for back-office operations, check processing, loan processing and servicing, and call centers. He also oversees the enterprise project management office, which manages technology and business-change programs across the company. "That's very helpful because it gets everyone focused on the business change and results and the outcomes we're trying to drive," he says. "Rather than getting too deep into the technology or what could be interesting to do, it's what needs to be done to get the results we're looking for." His predecessor had the title of COO.
At some banks a CTO, who is generally lower on the corporate ladder, plays the role of a CIO. And sometimes COOs, such as Laura Criscione at North Jersey Community Bank, act more like CIOs.
Lining Up the Rank and File
Beyond raising the profile of the CIO, IT-literate CEOs have business and IT people work in partnership throughout the bank. At Fifth Third, a consumer technology leader works directly with a consumer bank leader to develop strategies that support the overall corporate agenda, and similar arrangements take place in other business units. At a summit each summer, senior executives in the C-suite listen to presentations from these teams.
"Technology is embedded in our culture, it's embedded in the way we think about the business," Kabat says. "We don't separate the two, because we believe them to be so integral."
Many of the bank's 2011 technology initiatives were pitched by the business teams. The consumer bank pitched projects to upgrade Fifth Third's Internet bill-payment platform and launch a mobile platform. "At the end of the day, my eye was on the business case, user adoption and the things we thought were critical for the success of that program," Robinson says. "After the mobile platform launched, we were focused on improvements to uptime, availability and user adoption." He spent as much time on the mobile rollout plan marketing and education of employees and customers as he did on the features and functions of the product.
Last year, Fifth Third introduced a Duo Card, a combination debit and credit card, with Robinson's help.
"When we look at big programs, we rarely wait for the big swing. We tend to break them down into pieces and drive value along the way," Robinson says. "As we're building and integrating our infrastructure, we're looking for those steps along the way where we can create value and advantage. I'd rather see the technical team be able to deliver quarter to quarter some type of value."
At First Horizon, the relationship managers who work in IT have strong bonds with the business leaders in each group. "It's very important for that person to have a balanced relationship social skill set as well as the technology skill set," Robinson says. "So someone can sit in on a staff meeting with the head of the bank and contribute, explain new developments in the world of technology and add value to the conversation. Because they have development staff underneath them, they can make a commitment and actually deliver on it."
Livesay has worked in other banks that had a similar relationship manager role, but that person was an island. "They could make commitments, but they didn't have any ability to deliver on them," he says.
Building Technology at First Horizon
When Jordan brought Livesay in as CIO, technology spending had been slight. "We had not invested in a lot of our core banking systems in many years and we had invested in some systems that quite bluntly didn't work," Jordan recalls. Livesay "came in with a sizable mandate to take a look at what we were doing, where we needed to invest and how we could best improve our systems to make ourselves not only more effective and seamless for our customers and provide better services and products, but be more efficient in the process."
In the past 18 months, the bank has upgraded its Hogan deposit system, its Internet banking systems and its mobile banking apps. In January it deployed a new commercial loan system, HCL's Capital Stream, with workflow automation built in.
Today, though much work has been done, Jordan says he still considers technology one of the bank's top three or four priorities over the next five to 10 years. "Our retail business especially will rely more and more on technology," he says. "As we interact more with customers in a remote or non-face-to-face fashion, the ability to use technology to differentiate our service will be even more important. How do we use the technology tools we have to maintain connectivity to people so when they use a mobile device or call center, it still feels like the same interaction you would have gotten in the branch? How do we create that sense of familiarity for the customer?"
In 2012, Livesay expects to focus on regulatory reform and process optimization work "to be effective and efficient at delivering on all the table stakes things," he says. "If you're not doing the basics well, you're not going to be able to compete. The environment is getting much more competitive and commoditized."
He doesn't plan to buy a general workflow platform and start building business processes from scratch, though. "We're not so unique that we have to have completely custom solutions for these things," he says. "I wouldn't buy workflow software without a core third party behind it."
Competing Via Technology
Frank Sorrentino III, chairman and CEO of the $729 million-asset North Jersey Community Bank in Englewood Cliffs, N.J., has been a techie for years.
"When we started our bank, we recognized early that we're a customer service business that happens to sell banking products," he says. "At the same time, we may be partly a technology company, because we have to provide service through many different electronic channels. The vast majority of our clients are no longer coming through our branch doors; they're coming through our online banking system, remote deposit capture technology or mobile banking. These are all technology-driven events, and that's what's really driving the direction of the business. The banking business has turned into a commodity business. If you think you're in the business of opening a branch and that people are going to walk in to do business with you, you're living in a different age."
Like Jordan at First Horizon, Sorrentino recognizes the need to make electronic channels feel human. "There's still a one on one relationship, we have to meet our client face-to-face at times and there are still things you just can't do online," he says. "But a lot of the products customers want to use are technology driven."
Last year, Sorrentino bought enough iPads for all his board members and executives so that they could easily share documents at board meetings without bank staff needing to print thousands of pages of documents. This year North Jersey Community is going through a large-scale document imaging project in which every document in the bank is being scanned and digitized.
"Everyone will have access to the entire customer file, which will make the entire bank more efficient and allow us to move more quickly when our client requests something," Sorrentino says. "All their information will be digitally stored. This will also give our lending officers the capability to have multiple people working on one file at the same time." FIS' VisionContent is being deployed for the project.
The bank is also automating its loan underwriting process and rolling out mobile banking applications.
Sorrentino and his COO Laura Criscione "both take the time and effort to see what's coming down the pike as far as what technology is available, where we can be more efficient or where we can translate efficiency into better customer service," Sorrentino says. "At the end of the day, I'm not really trying to be a technology company because I want to be a technology company, we're trying to onboard all these technologies because we want to provide a better customer experience for our clients. We're looking for what we think makes sense and when we find it, we decide together how to get it done."
The two meet with other members of the executive team weekly to discuss new technology along with other issues. "You'd be surprised how much comes out of that meeting — a new technology reported on in the newspaper, what another bank is doing, a prospect who has asked for something we don't provide at this moment, which is rare but it does happen."
He also sees technology as a playing field leveler. "I can offer a lot of the same products the largest institutions can, so that really differentiates us from a lot of other banks," Sorrentino says.
Mistakes CIOs Make With Their CEOs
The biggest mistake a CIO can make with the executive team is to not collaborate with the business side, Beran says. "Sometimes they believe they have a captive audience that has to get services from them, whatever they decide to deliver," he says. "I ran the service company at Comerica like a business. These were my customers. I had to earn their business every day."
Another mistake is getting bogged down with minutiae instead of thinking about the bigger picture, says Jim Bailey, managing director, Accenture payment services.
"CIOs who are less effective spend a high percentage of their time on day-to-day operations issues, rather than setting a high-performing IT function in motion that frees them to focus on the projects that are truly value-added," he says. "They're consumed for hours managing outages and dealing with production issues" that don't advance the company in any way or lead to innovation. "CIOs that are highly effective are ones that do a very good job of managing base technology operations so they're free to work on more important things."
Bryan Jordan at First Horizon makes a similar point. "Where it doesn't work is when the CIO gets focused on the technical aspects of the job first, and the business aspect second," he says.
At First Horizon, CIO Bruce Livesay "has an innate ability to understand business objectives," Jordan says. "He focuses on the business outcome first and is able to deliver a solution that make sense because he understands the business objective first."
This story originally appeared at Bank Technology News.
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