In the modern world far off concerns often trump immediacy since our actual survival is rarely on the line in daily life with the environment like it was in our prehistoric past. Herein lies the dilemma, by the time we feel the consequences of these changes it may be too late. This applies to us as individuals whether it be our health, finances or how we educate ourselves.
It also applies in business.
Of course, most businesses are not multi-billion dollar behemoths. They do however consist of people who rely on their ongoing success to survive and live their best lives. At a business level, managers and directors have an obligation to direct the business so that it meets the needs of its stakeholders, which also means to survive and thrive in a rapidly changing environment.
More recently the changes faced by financial services companies as they face massive regulatory oversight, the move to cloud computing, unprecedented changes to the financial system which itself is being ‘eaten’ by software, and now the move to home-based working arrangements, and of course the rise of digital assets and a decentralised economy.
The world has changed and continues to do so at an accelerating rate. Yet many financial services businesses relegate the IT guy/gal to the corner of the business and only engage with them when a password needs to be changed, a computer is corrupted with a virus, or heaven help, the data has been encrypted by hackers and an extortion amount is demanded. This makes sense because it is rare that an IT person also speaks finance, portfolio management, risk-adjusted returns, Sharpe ratios etc. They also are generally thinking like contractors or employees, not as the leadership team with risk management and profit mandate.
The threat to those in the financial services industry
More generally, boutique bankers, financial advisors and others in the financial services industry with less than 100 staff have, in many cases, a technology perspective that is based on the world of the 1990s and possibly the 2000’s. Understanding technology back then was low on the priority list especially for finance professionals and bankers as something they care to understand.
In over 30 years working in the information technology (IT) industry and nearly 20 in financial services, I would argue that many companies particularly in financial services of between 15-100 staff face an emergent threat at the centre of their business. This threat resides, in the simplest of terms, in their understanding of the digital world they operate their business in and the engagement they have with the technology team.
As a result, businesses in the financial services industry are costing themselves 30% or more in real dollar terms for technology (people, licenses, SaaS services and hardware) and are also exposing their business to unnecessary additional risks relating to compliance and cybersecurity risk.
Consider that most financial services businesses have either a full-time or part-time contractor undertaking their IT support requirements, a managed service provider or a combination of the two. They have in addition a number of other elements that relate to IT.
If you think about it, they have in effect handed off the ‘risk’ associated with IT to the guy/gal in the corner and, in their minds, have exonerated themselves of that risk. That’s an illusion of course.
By handing off the IT risk to a person or team, who in most cases is not familiar with the broader strategic aspects of the business and compliance obligations, senior managers are placing customers , staff, shareholders and management at risk. By risk I mean not only the risk of losing market share, becoming unprofitable, but having their business destroyed first slowly then all at once, by a material failure to prevent a crippling attack or facing punitive action from the authorities or indeed crippling fines and personal accountability of the executive team itself.
The answer is someone on the leadership team or board who speaks all things business IT, Cybersecurity, understands the Digital Economy and the industry you are in.
