Pub. 2 2014 Issue 4

www.uba.org 16 The Tech-Savvy Board: Helping Directors Understand Technology By Jack Vonder Heide D irector responsibility for IT risk and strategy has become more conse- quential as customers migrate to electronic delivery channels. New laws, guidance and regulations require a higher level of board focus on the IT area. At the same time, many directors still classify themselves as technology novices. Technology is a continuum. People tend to develop a high degree of familiarity and expertise with technologies that were pervasive in their formative years. If a bank board is comprised of directors of varying ages, each member will generally bring a set of skills and a frame of mind that is characteristic of his or her genera- tion. A seventy-five-year-old director, for example, may have no idea how to use an iPhone. However, the same director would easily be able to drive a stick shift car. Ask this director how Wi-Fi works and you will get a blank stare. But if you ask how a Hi-Fi worked, you will get a detailed explanation of proper warmup procedures, changing defective tubes, etc. Most bank directors I have worked with have the natural ability to understand technology but many feel overwhelmed by the rapid pace of change and the increas- ing level of personal responsibility they must assume for an area with which they don’t feel fully comfortable. There are several steps that boards can take to improve the technical competence of directors and help them make better informed decisions. First, recruit an outside director who has a deep understanding of technology. An ideal candidate would be a C-level exec- utive who is currently working and who oversees the IT area of a well-respected large or middle market company. A pub- licly traded organization is best because the executive will have some familiarity with regulatory issues. Second, form a board-level technology committee. This group would be chaired by the tech-savvy director and would in- clude two or three other directors plus key C-level officers from the technology, risk management, operations, and business development areas of the bank.