To what extent are directors using technology in the boardroom?
For the longest time, the paper board book remained the standard in board books around the world. When we introduced our [digital board books], we thought they would take off, but adoption was disappointing for the first few years. In hindsight, it’s easy to see that it was the device that was the constraint. Basically, the readability of laptops compared poorly with that of print. We had 300 customers in 2010, and now we have 1,300 customers. That growth would not have happened without the iPad. It changed the equation. It removed a stumbling block that made it difficult for the technology to be accepted on a broad scale. And once that barrier was broken, directors have proven to be very receptive to using the technology. To give you an idea, BoardVantage has more than 50 percent of Fortune 100 companies as customers and many of them have gone entirely paperless.
How should directors go about educating themselves about technology?
Unfortunately, there is not a class to attend or a handbook to read. But the good news is that you can develop a solid understanding by reading major national publications such as The Wall Street Journal, Bloomberg Businessweek and The New York Times. They routinely follow technology in depth. There are [web]sites like Techcrunch and Business Insider that focus on the startup scene and disruptive technology. The other thing that I would add is that personal familiarity with technology is important. Phones, tablets and apps are all changing quickly. Directors who are reluctant to use that technology will find themselves at a profound disadvantage to engage in that conversation because they don’t know how things are being done. It is not wise for directors to stay distant.
Should a bank have a technology expert on the board?
If you look at a typical board, you will usually see strength in legal, in finance, etc., but often, technology does not get the attention it warrants. As the world is becoming more technology-centric, the opportunities and threats are more technology-related. I would argue that boards as a whole will have to improve their expertise. Also, if you are a small bank in a small town, you probably don’t have the same cyber risk as a big bank, but you can’t discount it.
What questions should the board ask management about cyber security?
A good start would be to have the chief information officer or security officer present to the board on a regular basis about the state of security at your institution. You want that person to begin mapping out the range of threats and the severity of those threats. Different organizations will, of course, have different risk profiles. If you are having this conversation once per year, it’s not enough.
What kind of communication are you seeing between meetings?
Not long ago, board communication was restricted to quarterly face-to-face meetings, but that is changing. We’re seeing customers use BoardVantage to send secure letters from the CEO to the board, just to give a quick pulse of the business. You see organizations develop [digital] dashboards with metrics that are important to the organization and updating them regularly, perhaps with visuals like traffic lights. Today, if the board only talks every three months, things change so much, it’s hard to argue that you’re really keeping in touch.