Technologically minded

Shalinin Singhal, CIO at Commercial Savings Bank, explains the challenges of getting senior level executives to believe in the importance of IT.

“The biggest problem is therefore convincing the board and I now have to do a cost analysis on how much it is all going to cost and what the return on investment will be”
-Shalini Singhal

Over the last few years information technology has become increasingly important for all but a few industries and organizations and correspondingly the CIO is now seen as a key contributor in formulating strategic business goals.

As the recession took hold, business goals became more strategic than ever as companies everywhere struggled to keep their heads above water and ride out the crisis. The role of CIO has become fundamental as businesses are seeking to improve operational efficiencies and cut costs where possible. The finance sector is no different and IT executives in this industry are now increasing pressure to streamline operations whilst at the same time proving a return on investment.

Shalini Singhal is CIO at Commercial Savings Bank and she believes that given the current economic climate, the relationship that businesses have with their technology vendors has never been so important. "Every business is cutting costs and this requires them to go back to the vendors. Not every CIO knows exactly what is out there in the technology world and whether what they are buying is correct. By going through the vendors, they can tell you what it is that you need to buy," she says.

However Singhal stresses that it is worth being cautious all the same as technology vendors may be your product leaders or managers but at the end of the day they are still trying to make money themselves and they are sales oriented after all.

One thing that Singhal loves about technology vendors is that they very rarely ever say no to her demands. "What I love about them is that they always have an answer," she says detailing how they always endeavour to meet her needs. "But what I hate about them is false promises and all the hidden costs that emerge down the line, which were not discussed at the time of presenting the proposal."

One thing that Singhal believes would help to improve the relationship with technology vendors is if they understood that every business has a different need. "They need to listen to what a customer needs and then see how they can change the products to meet these business needs because a customer does not need a canned product," she says.

With this in mind Singhal would like to see technology vendors taking a different approach and not overselling their products. One example that she sites is her efforts to build a disaster recovery site. "We have to buy a lot of products and we often have to go back to the vendor. There is a limited budget and you can't go over that, but you still want the best products." Due to these limitations it has now become necessary for CIOs to look for products that can offer more as opposed to using more products.

However, IT and operations are increasingly being seen as cost centers and Singhal explains that organizational restructuring is often undertaken as a way to cut operational costs, which is a major concern of many CEOs and CFOs. This cost cutting has taken pride of place on the priority list during the recession and consequently innovation is often overlooked by both providers and customers who are erring on the side of caution and opting to stick with the tried and tested technology that they are used to. But this is not an approach that Singhal recommends.

"With the economy the way it is going, there are a lot more hits, a lot more exploits, more spywares and malwares so you need to keep your technology in tact and up-to-date. You can't be stagnant in terms of technology," she says. Especially as the economic situation is prompting growing numbers of security breaches. "I've seen a lot more in the last six months in terms of malware, spyware, ACH frauds and wire frauds. There has been an increase because some people who don't have jobs are now looking at other ways to make money."

However, contrary to popular the belief, the main challenge here does not actually come from the potential of hackers breaking their way into the machines of the banks but rather those of the customers. "The biggest challenge is that the users are not very technologically advanced. The users who are using our online banking are not the most technologically advanced people, but they still like the leisure of using online banking from their homes," says Singhal.

"So these days the hackers have found ways to get into our customer's machines rather than directly through the bank and we don't have any control over our customer's machines. So the biggest challenge for us is teaching our customers to use a computer and teaching them how to avoid phising and other attacks."

The human challenge does not only affect customers though. There is also reluctance on the part of staff to adapt to new technology. "When you change the technology process, users are a lot less receptive to accepting these changes. It really depends how it affects their day-to-day job. You have to go through a lot of explaining and training to support the implementation of such changes. We struggle most with our people not adapting to technology changes fast enough," says Singhal.

This obviously requires extensive training and education, but surprisingly Singhal says that it is the board that actually needs this education. "The biggest thing that we struggle with is the fact that the board is not a very technologically advanced board. There are one or two people who are technologically minded, but the rest of them are financial people or doctors. They don't understand the requirements of technology so the education really is something that is needed from the top down," she explains.

This means that to implement new technology Singhal has to put together proposals for the board stating why the new technology is required, what benefits it brings, and how it will help to improve operational efficiency. This is something that has to be done for every single project that she wants to introduce.

As an example of this Singhal refers back to her attempts to implement a disaster recovery hot site and the board's reaction to this. "The board were not very happy with the amount of money we are spending and they didn't really see the benefit. They still think that tapes are good enough and didn't see the benefit of spending that huge amount of money to build a disaster recovery hot site. The biggest problem is therefore convincing the board and I now have to do a cost analysis on how much it is all going to cost and what the return on investment will be," she says with a sigh.

This is obviously a major challenge for any CIO. In times of economic turmoil where costs are being cut, the last thing the board wants to do is spend money unnecessarily. The CIO finds themselves having to sell a proposal for something that potentially may not be needed or used.

"It is always hard to sell the risk because there is no risk attached to it. It could bring the entire bank down but it might not affect anything at all. With IT it is difficult to difficult to get funding unless the board can see the effects of the risk, but if they do see the effects there will inevitably be big consequences," explains Singhal.

However, with modern technology banks and financial institutions can learn lessons from the experiences of their peers. Through Google and the internet organizations are able to get hold of data regarding the risks that other banks have fallen foul of. "It might not have happened to our bank but it as happened to another bank and that is how we can sell the results. We can see how it affected them and how much it cost them and that's the approach we take."       

Obviously Singhal would like CSB to be the key player in all the latest technology, but being such a small bank tends to make this a little unrealistic. But on the other hand it does also have its advantages. Small banks are often able to adapt to technology more easily and implement changes quicker due to the fact that there aren't quite so many procedures to go through or approval committees that need consulting.

Implementing new technology immediately is not always a possibility though and Singhal stresses that it is important for smaller banks to strike the right balance between being reactive and proactive. "We do not implement everything right away. We still look at the needs of the market. We do a a whole study, we do surveys at our organization and we see what is absolutely needed in terms of technology and then we go and implement that product," she explains.

Choosing the right time to adopt new technology can be tricky, but as a general rule Singhal likes to wait until it is absolutely necessary. The point where you can no longer function without a certain product, when all your competitors already have the new technology and when customers start complaining if you don't have it, is the time that Singhal recommends implementing the new technology.

On the whole CSB has been very good in keeping up-to-date with technological innovations. They are currently focussing on online banking for example as this is very customer-based and requirements have changed remarkably in recent times. Mobile banking is something that CSB has yet to adopt, but will probably do in the next year or so. Singhal believes that e-commerce, web 2.0 and wireless technologies are all on the agenda for next year at CBS and they are currently going through the budget process with a view to implementing these technologies.

Clearly the role of CIO is fraught with difficult decisions regarding what technology to implement and when to adopt it, not to mention the frustrations of trying to convince the board of the need to invest in protection against risks that may not actually materialize.

For Singhal, in order to perform well as CIO it is necessary to ensure that you have the support not only from the board but also from the community and from your executives. However, she also believes that her job would be slightly easier if those amongst the upper echelons of the organization in top management positions had a little more knowledge about technology.

Conversely though she also believes that it is important for the CIO not only to be an expert in technology, but to have some understanding of business in order to be able to understand the needs of the business and provide that all important return on investment.