Do You Need a Chief Technology Officer?

Tech-Officer-2.pngLooking to jumpstart his career, information technology executive Kevin Pilgrim made a strange request of his boss at Oklahoma’s First United Bank.

“I went to my CEO and said, ‘I want to go to banking school,’” Pilgrim recalls. “He looked at me funny and said, ‘Why do you want to go to banking school? You’re in IT.’”

That exchange about five years ago, and subsequent support from his CEO, proved to be prescient. Pilgrim, now the chief technology and information officer at Lone Star National Bank in McAllen, Texas, put himself on a path to stay ahead of a major trend in C-suites across the banking landscape. For many banks, it’s no longer acceptable to rely on technology leaders with deep information technology expertise, but limited understanding of banking strategy and execution. Chief technology officers increasingly bring strategic, operational and banking backgrounds to their jobs as technology moves to a starring role in the industry and away from its past as a supporting player.

Many forward-thinking lenders have moved executives with a traditional banking background into senior technology roles. And technology pros, such as Pilgrim, have realized a deeper understanding of commercial and retail banking can be a boon to their careers. Two years ago, Pilgrim left the lender he had served with in Oklahoma to become the chief technology officer at Lone Star National Bank, which has about $2.2 billion in assets, and was soon after promoted to chief information officer.

“I wanted to go to banking school so I could understand what our bankers eat, breathe and sleep everyday-deposits, loans, marketing and HR,” Pilgrim says. “It gave me the foundational knowledge I needed to go to different meetings with the investment group and the bankers and know how to find technology solutions that really met their needs. It bridged that gap, to understand the banking aspects of our business.”

Data and analytics, cyber security, client demand for technology solutions and intense competitive pressure have all pushed technology inside the bank to the forefront, making the chief technology officer a strategic priority. A recent report from financial services research firm Celent calls the modern technology officer an “innovator, integrator and instigator” as he or she takes a larger role inside the C-suite.

“The innovator seeks to understand industry changes, current and future business operating models, and the role that technology has in this future. The instigator is a change agent bringing energy and focus to the discussion of how the world is changing, and the impact on the business,” Celent says.

“It all comes down to the bottom line. That’s what the directors want to know about,” Pilgrim says. “So, a technology executive has to understand how the balance sheet and income statement works and where it all comes from. You’ve got to understand that to really dig into the technology, risk and various products.”

At Bank of America Corp., the nation’s second largest bank by assets, Chief Executive Brian Moynihan has looked to Cathy Bessant for several years as his management team’s chief technology officer. Bessant rose through the traditional corporate, commercial and consumer banking ranks to now oversee thousands of technologists working on innovative new products and solutions for the bank that holds more patents than any other.

At a symposium in the bank’s hometown of Charlotte in 2015, Bessant told a luncheon audience that she never envisioned her current job when she began her career. However, she has embraced the central role technology plays in the future success of the company and her assignment as the bank’s tech leader. “Not thinking about technology as transformative in financial services is one of the greatest competitive mistakes you can make,” she told the Charlotte Business Journal. Bessant said bringing a financial professional’s language and approach to the technology division has helped bridge the gap between software developers and traditional bankers.

“Cloud is something business people who are not technologists can’t put their head around. Fixed cost to variable cost? That’s the language of a CFO. That’s the language of business,” she said. “I just think jargon labels, especially for technologists who seem so distant from the expertise of many people, creates a divide that is unhealthy for the integration of technology into the business process.”

Graham Michener, a managing director at RSR Partners and the executive search firm’s financial services leader, says bank CEOs and boards of directors are looking for chief technology officers who can bridge the divide between technology and business. He says CTOs who can understand how to strategically build organizations and communicate are a prized asset. “Technology changes at rapid pace,” he says. “The CTO needs to demonstrate that he or she knows how to assess, change and build an infrastructure for not only today’s needs, but also for tomorrow’s. The CTO should be incredibly involved in the C-suite and must make sure the top of the house, including the board of directors, is involved in the communication. Knowing your audience and being able to speak their language is critical. It’s vital that the CTO can communicate with every constituent.”

At $42 billion asset Silicon Valley Bank, the go-to bank for the technology industry, the C-suite was rearranged recently to bring banking products and technology professionals under the same supervision. Bruce Wallace, a 27-year banking veteran, gave up his role as chief operating officer to helm a newly created role, chief digital officer. “All of the products we deliver to clients today go through the electronic channels,” Wallace says. “We designed this position to go end-to-end, so somebody would be responsible for the technology piece, the product piece, the delivery piece and the service piece.”

He now has responsibility for all online and mobile channels, APIs (computer applications that allow different platforms to work together) and every other channel where Silicon Valley Bank digitally connects with its clients. His group is also responsible for all development of new products.

Wallace, who came to SVB after 20 years at Wells Fargo & Co., says the new job remains a work in progress. However, he already sees benefits from bringing the lender’s developers and technology pros into the same group with its product teams, sharing the same goals. He also is able to apply his lengthy commercial and retail banking background, freeing up developers under his supervision to focus on their strengths.

“I do draw from my understanding of the regulatory and compliance environment, understanding data and privacy and all the things that come from a long banking background,” he says. “We don’t want to bog down the development team with too much compliance and regulation. We want them focused on innovating and delivering in rapid way new experiences for our clients.”

Adam O’Daniel

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