Your board of directors is responsible for safety and soundness, growth, and increasing the profitability of your bank — all while serving the needs of your customers, employees, and community. Meeting these goals requires that the board of directors makes wise investments in capital projects, including adding or upgrading technology. In a world of finite resources, they want to see a return on investment (ROI).
A board must justify its investments and measure ROI in terms of money saved, increased income or and profitability, or stronger safety and soundness. Therefore, when presenting a technology investment to the board, you need to demonstrate how the investment will deliver value by supporting the board's goals.
Related: What Does the Board Really Want from You?
How can you make your case to the board? Think about the investment from the board’s perspective, consider their potential objections, and prepare your response.
Don’t know where to start? Here are four common objections and how to overcome them:
1. It's Too Expensive
You don’t need me to tell you to expect this objection, but I can tell you how to counter it.
It comes down to showing what it will cost your financial institution if they don’t add the technology. As with any other potential objections, discuss in financial terms any opportunities that could be missed by not making the technology investment.
Related: 4 Reasons to Get Risk Management Software Designed for Financial Institutions
To make your case bulletproof, use “hard” numbers as much as possible rather than theoretical projections. You should also offer use cases and show how other financial institutions have successfully used the technology. Provide examples and metrics that show the value and return on the investment.
For example, let's say your institution is evaluating vendor management solutions. If your institution has 8 Tier 1 vendors and 15 Tier 2 vendors, think about what how long it takes your staff to:
- Gather due diligence documents: 2 hours per vendor
- Review documents and conduct risk assessments: 41 hours per vendor
- Monitor negative news: 1 hour a week
Figure out the time cost of the work. Our research suggests in this case the cost is a little over $47,000 a year. If the technology you’re presenting costs significantly less than $47,000 a year, it’s a clear winner.
Related: 4 Reasons to Get Risk Management Software Designed for Financial Institutions
2. Can't we wait until the technology is more proven?
While your institution likely doesn’t want to be on the bleeding edge of technology, it also doesn’t want to be left behind. Discuss what it would cost your institution in terms of potential business lost, cost savings missed or additional risk (for security and compliance technology) by waiting a year or more to invest.
In today's economic environment with soaring inflation, you can also project how much more costly the technology will be at some future point in time.
Related: Exam Coming Up? 6 Reasons to Adopt Risk, Compliance & Vendor Management Software Now
3. We've done fine with our current technology, so why do we need this?
Be ready to discuss how the proposed technology will improve financial results and operations compared to the system you are currently using. You can demonstrate this in terms of labor or other savings (as in the case of automation), enhanced revenue, or protection against certain risks such as malware attacks, depending on the type of technology solution you are proposing.
Related: Ncontracts announces new tool to lighten compliance workload
It's also important to detail how the technology will directly support the board’s strategic plan. Is the board focused on efficiency? Growth? Expanding its digital footprint?
Show you understand where they want to go and how making this investment today will help get them there. For example, if your bank is growing, it needs GRC tools that will keep pace. Whether it’s planning to cross $1 billion in assets or opening new branches farther afield, it must have risk management and compliance tools appropriate for its size and risk profile. It’s important to acquire these tools before growth goals are achieved — otherwise the institution will find itself scrambling to catch up.
4. We don't understand how it works
In your presentation, discuss the technology in lay and financial terms, especially financial benefits, not “technospeak.” Again, your board wants to know the basics of how the technology will benefit the institution. They don't want to get into the weeds of the inner workings of the technology. Remember, they are not technologists.
Let them know the technology is part of the cloud and the benefits that offers.
Provide a basic overview, but don’t assume that’s all the board will want. Be prepared to drill down a little into the technology without overloading them with information if the board asks for more detail.
For example, if someone asks for an explanation of cloud technology, offer a simple and concise explanation. Save talk of virtual machines and subnets for another audience.
Related: How To Work With The Board & Management: 6 Tips From A Top Compliance Officer
Making a strong, insightful presentation to the board while anticipating and efficiently countering potential objections, does more than convince the board to fund your technology proposals. It also helps burnish your credentials, establishing yourself as a financial professional knowledgeable about technology and strategy and making it easier to win approval for future technology projects.
Want more advice on how to best communicate with the board? Watch our webinar "How to Address Risk, Compliance, and Audit Issues with Your Board."
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How to Respond to 4 Common Technology Objections from Your Bank Board
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