Finetuning the ‘digital’ in board compositions
Not too long ago, EITN covered an event about the RMiT (Risk Management for IT) and board member responsibilities that this policy document entail, for boards of directors for financial institutions.
Chu Hong Keong, a long-time IT veteran in the banking and telecommunications industry, gave his detailed views about the changes he has observed over the years across different industries. “Digitalisation entails digital innovations and transformation of business model, products/services, processes, etc and no longer mere use of technology and IT implementation. It involves and penetrates the entire organisation from board, senior management all the way down to every staff.”
Dr. Reto Gruenenfelder, currently an independent technology and cybersecurity advisor on a Bursa Malaysia committee, also echoes the same thought, “Going digital means more than just a word, it is a fundamental change of business in all regards.
Dr. Reto also added, “ To achieve a meaningful digital transformation both business and technology insight are prerequisites, therefore boards benefit having a balanced representation of business and technology insights.”
So, what does digitalisation mean for boards of directors?
Finetuning the requirement
Hong Keong had opined, that existing board member compositions should include skillsets/experience in the organisation’s specific industry, business strategy, risk management, technology, audit, etc.
But in addition to this, there would be increasing needs for skills/experience in digital strategies, innovations, transformations, disruptions, collaborations, platform, customer experience and associated digital risk management, he observed.
If we were to go deeper into these skillsets for boards, CEO of FIDE Forum, Lim Lai Hong, had separately shared in a Linkedin article that it is helpful to have board members who, as a C-suite member or entrepreneur, has led technology adoption or digital transformation in their career. “But, we have to be mindful it is critical that we do not appoint single-expert board members given the board’s extensive governance responsibility.”
FIDE Forum is a community of Board leaders from the financial services sector, that was incorporated as a company in 2012.
Digital savvy leaders on boards and their different technical views are in demand, and Lai Hong brought up a pertinent point: How can the board bridge the gap between ‘knowing the facts’ and ‘doing something about it’ while effectively managing risks, especially the newer forms, for the financial institution’s sustained competitive advantage?
How can the board bridge the gap between ‘knowing the facts’ and ‘doing something about it’ while effectively managing risks, especially the newer forms, for the financial institution’s sustained competitive advantage?
She also emphasises that rather than from a specific technical expertise, digital savvy leaders can be identified from their mindset, experience, and personality. She wrote, “It is possible to have a successful accountant, for instance, who is a digital leader, and a career-technology specialist, or programmer, who is not.”
Bank board member, Chong Chye Neo sought to fintune this idea by adding, “There are two basic categories of “digital” that we need to be cognisant of. One can broadly differentiate between Digital Innovation (change the bank) and Operations (run the bank).
For many banks, Digital Innovation is no longer a strategy, but in execution mode. At the same time, technology resilience against operational disruptions has become major focus by regulators.
“For many banks, Digital Innovation is no longer a strategy, but in execution mode. At the same time, technology resilience against operational disruptions has become major focus by regulators.”
Might this distinction help boards understand the skillsets and type of digital savvy that they need?
Chye Neo’s observation of what is happening currently, then begs the question: Which should the board focus on, vis-a-vis the focus of the executive team? Is it possible to have both?