It is time Indian banks elevated CIOs to the board level

On November 9, 2017, the Reserve Bank stated that IT expertise at banks’ board level is a must. Considering the recent spate of cyber-attacks and the banking space becoming more technology driven, RBI’s statement comes as no surprise and is being perceived as a much-needed move.

It’s imperative for the bank’s IT flagbearer to have a thorough understanding of the banking industry and tech know-how to augment the digital drive. And the person best suited for this job is of course the CIO.

CIO India talks to IT heads across the banking vertical, covering both large, medium and small banks – to understand why the CIO’s inclusion at the board level is a step in the right direction.

On May 18, last year, RBI rolled out a circular that specified the minimum qualification and experience required for CFOs and CTOs.

For the role of a CTO, the RBI mandates a degree from a recognized university, a minimum experience of 15 years in the relevant field, and at least five years’ experience at the senior management level. Additionally the governing body mandates that the candidate has to be from the banking IT related space and have experience in IT policy making, managing IT applications, and expertise in cybersecurity and payment technologies.

Mithilesh Singh, Director-Technology Audit at IDFC Bank points out that RBI recognizes the CEO, CTO, CIO, CFO, CRO and CISO as specific roles. Justifying the need to have IT expertise at the board level, he highlights that most board members are industry experts or domain experts, but their technical expertise may not be on par with CIOs or CTOs.

“IT has evolved from being a support function, to an enabler to support the business, and is now perceived as a business transformer. I strongly feel that the time has come for CIOs to be nominated for the board to help meet the current challenges posed by emerging technologies, compliance requirements, and cybersecurity breaches,” says Singh.

Seconding this viewpoint is Munish Mittal, Group Head–IT, and CIO at HDFC Bank. He is of the opinion that in the age of digitization, the CIO is strongly considered as a transformation leader. The CIO brings IT expertise to the table and this also adheres to RBI’s mandate to bring technology talent to the board level.

“Why should banks appoint a third party external expert and not an executive board member? At the end of the day, what does a third party expert know better than the incumbent CIO?” adds Mittal.

And it’s just not the large banks that believe in roping in IT expertise at the board level.

Representing the co-operative banking segment, Ravikiran Mankikar, CIO at NKGSB Bank states that IT expertise is very much required at the board level, especially for co-operative banks. However, he believes that it does not necessarily have to be a CIO representing IT at the board level, and says that an independent director at NKGSB overlooks IT at the board level.

Balram Choudhary, DVP – IT at RBL Bank points to how CIOs understand the business, and are therefore business enablers. He says that just like CISOs are part of the board in many banks, the CIO should also be included in the board.

“There will be challenges, but I believe CIOs can play the balancing act between managing IT responsibilities and driving board-level vision. Right now, CIOs are not only under pressure from the board, they also have to understand business problems and users’ problems,” he adds.

So who should the CIO report to?

Singh, from IDFC Bank says that the CIO should report to either the MD or the CEO, and anything lesser may dilute the importance of a CIO. He adds that the hierarchy also depends on the complexity of operations and size of the organization.

Mittal, the man manning IT operations at HDFC Bank believes that the CIO must always report to the CEO.

It’s true though, that a common reporting structure cannot be applied as a blanket rule for all banks in the country. As Mankikar points out: “It depends on the organization. In some organizations, the CIOs reports to the CEOs, and are part of the board. In other organizations the CIO reports to the COO, and the COO is part of the board.”

Given the ability to play the balancing act between business, technology and compliance, there isn’t a shred of doubt that the new age banking CIO has what it takes to be included among board members and has a say in a bank’s policy making and vision.