When you're the leader, who do you follow?

Many bank directors are asking themselves this question as they try to make sense of the impact of technology. Many say they feel unprepared for the decisions their institutions face. They are concerned about delaying a necessary decision or making one too quickly. They fear leading a bleeding- edge parade or following too far at a distance.

A board's ability to oversee technology effectively may be its most critical issue. Failure to deploy information systems that support the bank's business strategy can destroy shareholder value as quickly as the real estate demise did their credit portfolios in the 1980s.

Since "board management" ranks high on the list of chief executive officer concerns, I talked to chief executive officers around the country to find out how they work to get directors up to speed on new technology and develop the support they need to put the systems in place that will help them realize their competitive strategy.

To Bill Mortensen, chairman and CEO of $4 billion-asset FirstFed Financial Corp. in Santa Monica, Calif., "Caution is more at issue than questions."

Mr. Mortensen's board is somewhat unusual, having two members from the technology world. Before making technology decisions, the CEO said, his board "gets comfort knowing that we've talked with others who have used the system we're considering, and we've learned about both the good and bad experiences."

Mr. Mortensen said his board doesn't need peer measurements but likes to have a good idea of the costs, expected benefits, the downside risks and time lines.

"I'm frequently asked if we have the right set of skills and talent on board," he said. That's a question that needs to be addressed as an integral part of the planning process.

David Carson, president and CEO of $7.5 billion-asset People's Bank in Bridgeport, Conn., one of the first in the country to use telephone banking, is ahead of the curve in technology planning. At a time when written technology plans are just becoming part of the planning process, Peoples Bank is into its third five-year plan.

"Technology planning has been a strategic part of our lives," he said, emphasizing a "no-surprises" approach to his board.

"We've never had to have a big hit because what we've had has been a consistent plan," Mr. Carson said. Technology planning is the most basic part of director education at Peoples - and should be at every community bank.

Directors need to make sure that large-scale technology investments will truly benefit shareholders. To that end, a capital and operating budget covering three to five years should form part of the bank's technology plan.

"Technology should be a business decision like any other - complete with cost/benefit ratios," said Robert Mauldin, chairman of Centura Banks Inc., a $5.6 billion-asset company based in Rocky Mount, N.C. He believes in keeping his board fully informed, not only about the amount of spending but on the results achieved.

"The world is changing rapidly and you make mistakes," he said. "It is just as important to report on those failures."

Each year, this innovative CEO holds one of Centura's board meetings in its technology center. "We let the techies show off their newest things," he said. The first-hand exposure not only allays fears but fosters pride in Silicon Valley-like advances. It provided Centura with an ideal venue to introduce home banking.

When Centura introduced its debit card, the directors had theirs first.

To show off the "Centura Highway" telephone services center, Mr. Mauldin planned an off-site retreat at which the board dialed into what he characterized as "the largest branch in the company."

CEOs all agree that high on their directors' list of concerns is how new technology will affect customers. Directors of small and midsize banks tend to favor the personalized delivery style and like being reassured that new technologies will facilitate customer service and productivity rather than replacing people with machines.

Boards must understand that when deployed properly, technology should enhance, rather than detract from, the personalized nature of community banking and present unlimited opportunities for innovation instead of mere automation. In short, technology will give talented people more tools to apply creativity and judgment but will never replace people.

Another of the directors' common questions regards financial risk.

To mitigate concerns about returns on spending, be sure the technology is being integrated after careful planning. An information strategy plan, submitted for directors' approval, could delineate how the bank is limiting the volatility of its investments and assure them that you are managing technology assets like any investment portfolio. Such a plan will assure directors that new systems are well integrated and provide useful tools to manipulate and analyze information.

CEOs should remember that a picture is worth a thousand words. It won't be a sterile budget document or technical terminology that garners board support. It will be a passionate, audacious, and well-informed vision of the future, coming from the CEO.

Ms. Seymann is president and chief executive officer of M One Inc., a management consulting firm in Phoenix.

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