Research that The Copper River Group has conducted clearly shows a divide between up-and-coming banking executives and their perceived role with regard to banking technology. From our point of view, there is an attitude that technology, and how it works, is a job that is relegated to the "back office." Disinterest is shown relative to tech trends and is quickly branded as "too complicated." The irony is that these same executives will soon be participating in technology decisions that they know little about. The executive response:
· I just expect it to work.
· It's Magic!
· Don't have the time.
· We have vendors for that.
The FFIEC has tried to reverse this trend starting back in 2009 with the publishing of the Risk Management of Remote Deposit Capture Guidance. Outlined in the guidance was the requirement that bank boards and senior management teams be involved and informed when it comes to bank technology decisions. Subsequent guidance and the FDIC's annual IT Officer's Technology Questionnaire continue to stress the need to be involved in and understand the technology decisions and strategies being implemented.
Let's be clear... being involved and informed is more than sitting through a 15 minute presentation just before you approve the expenditure. Secondly, not all technology decisions can be justified through cost savings in operations. Third, the more technology you install, the greater the risk to your organization. If you don't understand the technology, multiply that risk by a factor of two! This is only an estimate.
A simple truth: offering online account opening using an ACH debit to fund the account can torpedo your financial institution earnings through fraud and can materially increase losses very quickly. Observation: the relationship between technology, and knowledge is conversely proportional. The more you spend on technology the less you really know about the technology! Alec Baldwin.... REALLY?
Not long ago technology played a supportive role in banking. Technology was used to augment staff. Today the opposite is true. Technology plays a primary role in the banking enterprise. Little is done without first going to the computer, online system, internet, and so on. Banking schools, however, continue to emphasize curriculums that are very lean in technology.
The 21st Century is here whether you like it or not. Banking schools need to place technology on equal footing with lending and immediately update their curriculum. In addition, course rigor should be strengthened to include pre-testing prior to school admission combined with required reading with online testing to demonstrate proficiency prior to each class year. Banking schools need to take technology as seriously as the regulators do. A legal ruling recently issued by the U.S. Court of Appeals (First Circuit) clearly placed the responsibility on the financial institution pertaining to their use and knowledge of the technology installed (Patco V. Ocean Bank). The court's decision was huge. [Read more about it]
Finally, the schools should confront this deficiency through the immediate addition of required technology classes to each year of the banking school curriculum, along with rigorous testing and summative assessments. Understanding that there is limited time available during each term (on-campus session) schools should expand the class schedule to include on-line courses throughout the year with subject-matter testing.
Ultimately, the new standard should be that: if a student fails the technology portion of the banking school, they will not graduate! That will be a wake-up call for the school, the sponsoring bank, and for the student.