Bank's IT departments are unable to pursue innovation with the latest digital technologies because they have lost influence in the boardroom with senior managers that do not properly understand new technology.
This is the conclusion of a survey of over 200 European IT heads at financial services firms commissioned by IT service provider Luxoft.
The report, Confessions of a CIO, found that 86% of respondents had recently proposed a major digital project only for it to be turned down once it got to the boardroom.
The IT heads believe the lack of traction they are receiving is partly down to misconceptions and unrealistic expectations among their senior management. For example, 78% say that their boardroom superiors do not understand the technology while 81% expressed frustration at the demand to provide innovation yet cut costs at the same time.
The lack of understanding is especially acute in the UK (85%) compared to the likes of Germany (76%)
“Tensions in financial services IT departments are reaching boiling point,” says Roman Trakhtenberg, Group Managing Director and Global Head of Excelian, Luxoft Financial Services. “Technologists in finance want to be the gateway to the innovation but right now they are unable to influence decisions at the top. Instead, IT professionals in finance are stuck dealing with internal legacy systems and imminent cyber-risks, and are not getting the support they need to implement real change.”
Despite bank bosses calls for more innovation, the majority of IT departments (78%) feel that they are underfunded. The problem is especially acute at small and medium institutions where almost all (97%) of IT heads believe they need greater investment.
The consequence of boardroom ignorance and chronic underfunding is that IT departments have lost the ability to innovate, says Trakhtenberg. "It is harder than ever working as an IT executive in a financial institution."
However, the report shows no clear consensus on how this problem should be solved, with less than half (41%) of respondents believing a change of business culture is needed - a percentage that is barely more than a third in the UK (37%).
It is not the first time the subject of boardroom affinity witrh technology has arisen. A study by Accenture conducted in 2015 found that almost half of the world's biggest banks had no directors with any technology experience on their boards.
Since a number of big banks, such as JP Morgan, Santander and HSBC, have sought to appoint more senior executives from a technology background or else establish tech advisory boards, but the research from Luxoft suggests that, as an industry, there is still some way to go.