Protiviti: CIOs Face Growing Risk In Financial Services IT

Financial services organisations are facing a critical inflection point in their technology strategies. With most institutions allocating between 50% and 80% of their IT budgets to maintaining existing systems, innovation has become severely constrained.

Dan Stummer – Global Managing Director: Head of Technology Consulting Financial Services at Protiviti, believes the imbalance has already reached crisis point. "I think we're already there," he says.

"If that 70 to 80% of their entire run portfolio" is consumed by maintenance, organisations struggle to fund growth. This leaves only 20% to 30% of budgets available for innovation.

For Chief Information Officers, the challenge extends beyond simple resource allocation. Technical debt remains largely invisible to C-level executives who do not directly experience the mounting costs.

Dan explains that CIOs often struggle to articulate their challenges in business terms. "One of the things that's difficult is actually just conveying to people why it takes so much to keep those lights on," he notes.

Career progression in technology leadership typically focuses on systems and tickets rather than financial acumen. CIOs must learn to frame their portfolios in the context of balance sheets and income statements.

The communication breakdown extends throughout organisations. Statistics show that 55% of middle managers can identify only one of their company's top strategies.

Dan reveals that this stems from transformation fatigue. "There's always an and conversation, and really the most critical thing is it's an or," he observes.

Organisations that fail to prioritise leave employees uncertain about what matters. Middle management needs clear direction about priorities.

Technical debt accumulates through seemingly rational decisions made over time. Leadership often feels paralysed when confronting the scale of issues.

Dan continues: "Getting people into a safe space in which they can say those things that we all know" represents the first step. "What they really need is some help to be able to move something small, something meaningful forward."

Legacy system challenges and operational resilience demands

Enterprise platform adoption offers significant advantages for organisations willing to simplify architectures. Dan emphasises the importance of focusing on core value propositions.

"Anything that isn't there that completely differentiates, you probably don't need to focus too much on it," he advises. Consolidating from thousands of applications to focused core systems makes architectures manageable.

Artificial intelligence presents both opportunity and challenge. Many organisations lack the data infrastructure required to implement AI effectively.

Dan observes a fundamental mismatch in expectations. "Most boards are seeing it as an opportunity for cost takeout," he notes. However, AI capabilities excel at generating opportunities rather than reducing expenses.

The disconnect between cost-cutting ambitions and AI's creative strengths creates unrealistic expectations. Organisations need proper data structures before AI can deliver results.

Regulatory changes around operational resilience and incident reporting are reshaping risk profiles. New requirements force CIOs to rethink their approach to stability.

Dan says forward-thinking organisations view resilience programmes as competitive advantages. "Those that are seeing it as a competitive advantage to be on the forefront of the resiliency programme" will succeed.

Business agility becomes the ultimate goal. Simulations and understanding complex architectures position organisations for success.

What can the future generation expect from technology?

Workforce dynamics add complexity to modernisation. Older employees understand legacy systems whilst younger recruits arrive trained in modern technologies.

"The code base is pretty archaic and everybody knows that," Dan explains. Most universities no longer train graduates in the outdated programming languages that power financial systems.

Young professionals enter institutions expecting cutting-edge technology but encounter technical debt. Dan reveals: "There's a wonderful moment that if you can bring those two generations together and be able to transfer that knowledge."

Organisations that create hybrid environments achieve long-term success. Knowledge transfer becomes essential for maintaining systems whilst building capabilities.

Many firms emphasise digital innovation. Dan suggests organisations should prioritise infrastructure resilience and architectural foundations.

"If you really focus on creating a structure, creating an architecture and an infrastructure that allows you to have a bit of nimbleness and agility in it, you're going to find that pain that you have initially will become a competitive advantage longer term," he notes.

Transformation timelines often disappoint stakeholders. Business cases fail to account for realistic periods.

Dan concludes: "If you have this constant agile environment around your innovation portfolio, and it's just always something that you do, I would encourage people to think about transformation more in the terms of innovation that is always on."