Published on the 28/11/2017 | Written by Jonathan Cotton
With bitcoin prices surging and fintech the fastest growing start up sector in Australia, it’s a brave new fintech world - but not everyone’s on board…
According to IT managers, excessive wariness – and sometimes outright ignorance – from boards is holding up innovation and the fintech revolution as whole.
A new report – the salaciously-titled Confessions of a CIO – finds that major digital projects are all too often failing to make it past the boardroom. The European-based survey of 200 IT decision makers (produced by IT service provider Luxoft) show 86 percent of respondents saying they‘ve recently championed a major digital project only to fail in securing sign-off from senior colleagues. Similarly, 78 percent of respondents said that senior colleagues did not understand technology and were at least partly to blame for project failures.
So with the rise of AI and the Blockchain revolution well underway, could it be that C-suite executives are failing to grasp the very concepts they’re meant to be governing?
“These are emerging technologies where very few directors have experience or training,” Henri Eliot, CEO at Board Dynamics, told iStart. “It’s often the case where the board does not understand the business case simply through lack of technical knowledge or risk aversion”.
And that lack can have very real ramifications for the way companies ultimately end up being run.
“It depends on the type of organisation. For example, traditional banks often focus more on compliance versus innovation, based on the existing board composition and risk appetite. Boards need strategic technologists who can ask the right questions in order to make informed decisions on whether to approve investment in new technology business cases at the right time and avoid the pitfalls of making bad investment decisions or lack of innovation in strategic discussions around the boardroom table.”
“Start-ups with a governance model like Xero in the past had a mix of skills that understood the technology but the founding management team with Rod Drury had the technical skills to translate the business case back to the board in order for the directors to make an informed decision.”
At heart, it’s the board’s problem to solve said Eliot, and that solution comes by way of stacking boards with the right combination of people.
“The governance challenge is attracting the right skilled [people] who are strategic and interested in governance. Often [new board members] are not appointed due to a lack of governance experience – something of a chicken and egg issue’ – but the solution is attracting next-generation directors to the board with these technical skills through training and mentoring.”
And though it’s the emerging tech most likely to see boardroom eyes glazing over, it’s exactly the challenge that those emerging technologies pose that will force boards to reinvent themselves into more digital-friendly incarnations.
“The forthcoming blockchain/bitcoin revolution will hopefully encourage more boards to have at least two independent directors with technical experience…and able to add value in the boardroom with a combination of skill sets”.