Community bank boards and executives have always shouldered responsibility for risk, strategy, and growth. What’s changed is how much technology now drives all three.
Information technology, cybersecurity, data, and automation are not just operational concerns. They’re fiduciary concerns carrying accountability and liability for the board and senior management.
Failing to engage with these issues doesn’t remove the responsibility. In fact, regulators, shareholders, and customers increasingly expect leaders to demonstrate technology oversight. Inaction is not a neutral position, it’s a decision with costs and risks.
Get a roadmap for directors and executives to understand their role in IT governance, how to identify key risks, and what questions they must ask to protect and advance their institutions.
Understanding the board’s fiduciary role
Boards are expected to oversee financial soundness, risk management, and compliance. Today, that same fiduciary duty extends to IT oversight. The foundation of that role includes:
Knowing the framework your bank uses (such as NIST CSF, or something else) and confirming management is aligning technology strategies with business goals and risk appetite
Defining accountability so IT and cyber leadership roles, reporting structures, and decision rights are clear
Regularly reviewing budgets and priorities to align spending with the most pressing risk areas and strategic growth
Oversight doesn’t require technical experience, but it does require consistent engagement and informed questions.
Why inaction is costly
The cost of failing to provide oversight is measured in many ways:
Strategic opportunities missed when fragmented technology prevents efficiency and customer insights.
Operational risks increased through shadow IT, outdated systems, or inadequate vendor controls.
Regulatory scrutiny heightened if data, cyber, or vendor governance programs don’t meet expectations.
Reputational damage amplified if a breach, outage, or customer experience failure exposes weak oversight.
For boards, not making decisions carries the same weight as making poor ones.
Strategic planning through the lens of technology
Every growth discussion, whether new products, market expansion, or M&A depends on a technology foundation that can scale securely. Directors should ask:
How does our IT strategy align with customer demographics and growth targets?
Are we investing in infrastructure that adapts to new technologies and regulatory requirements?
What opportunities exist to consolidate vendors or invest in automation that reduces cost and risk?
Technology can’t be left as a back-office afterthought. It’s central to how your bank competes.
The evolving cyber threat landscape
Cybersecurity is no longer just an IT problem. It’s an enterprise risk issue requiring board-level oversight. Threats such as ransomware, phishing, social engineering, vendor compromises, and AI-enabled attacks now target institutions of all sizes.
Boards should focus on:
Cyber maturity: How well are policies, processes, and technologies integrated to protect information assets?
Training and culture: Are employees prepared to recognize threats and respond effectively?
Framework adoption: Is the bank using structured models like NIST or the Cybersecurity Capability Maturity Model to guide improvement?
Directors shouldn’t attempt to out-think hackers but must equip the bank with preventative strategies, adequate resources, and a culture prioritizing security.
Vendor management: Responsibility cannot be outsourced
Regulators have been clear: a bank may outsource a service, but it can’t outsource responsibility.
Boards must verify management has strong third-party risk management processes in place, including:
Enterprise-wide policies for selection, contracting, monitoring, and termination
Risk-based oversight of critical and high-risk vendors, including fourth-party relationships
Specific attention to how vendors use artificial intelligence or store sensitive data
Boards are accountable for confirming these safeguards exist and are working.
Data governance and asset management
One of the most overlooked board responsibilities is making sure the bank understands and governs its data. Without this foundation, no amount of tools or automation will succeed.
Data governance means treating data as a strategic asset: accurate, consistent, secure, and used appropriately across the organization. IT asset management provides the bank with insight into what systems it owns, how they are configured, and when they should be replaced.
The relationship is clear: sound data sources are more important than cool tools. Investing in analytics or AI without disciplined data governance only magnifies risks.
The role of AI, automation, and digital tools
Artificial intelligence and automation are transforming the industry. Customer service chatbots, fraud detection models, digital marketing, risk management, and compliance monitoring all increasingly rely on AI.
Boards must engage with three truths:
Data is the fuel. Without accurate and governed data, AI outputs are unreliable.
Automation is the engine. Automating repetitive processes creates capacity and reduces error.
AI is the intelligence. When applied responsibly, AI delivers insights, predictions, and operational efficiency.
Directors don’t need to understand the code behind AI. They need to understand where it’ s used, how risks are managed, and how it supports strategy.
Practical steps for directors
Community bank directors can provide effective oversight without being technologists by focusing on five key actions:
Ask the right questions. How are we aligning IT strategy to business goals? How do we monitor vendor AI use? What red flags should we watch for?
Recognize red flags. Infrequent IT reporting, vague answers, untested disaster recovery plans, or reliance on outdated systems are warning signs.
Support training and culture. Cybersecurity awareness must be organization-wide, not limited to IT staff.
Prioritize risk-based investment. Budgets should reflect the greatest risks, not just operational requests.
Insist on governance structures. Policies, frameworks, and oversight mechanisms should be documented and updated.
Accountability, liability, and leadership
Directors and C-suite leaders are accountable for the outcomes of technology decisions, and for the risks of indecision.
Choosing not to modernize, not to invest in cybersecurity, or not to evaluate data strategy doesn’t remove responsibility. It compounds it. Regulators, customers, and shareholders will hold boards and executives accountable for the results.
Leadership in this era means embracing oversight of IT and digital risk as a core fiduciary duty. By asking the right questions, setting expectations, and monitoring progress, directors can help safeguard their institutions while positioning them for growth.
Stewardship in the digital age
Community banking has always been about trust and stewardship. In today’s environment, that stewardship extends beyond financial statements into the digital infrastructure that underpins every customer interaction.
Directors and executives cannot plead a lack of technical knowledge as a reason for disengagement. They are expected to engage, to oversee, and to lead. By doing so, they protect not only their bank’s operations but also its reputation and future.
For more information on IT governance and risk, contact Tim Dively at tim.dively@CLAconnect.com or 704-816-8575.
The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CLA) to the reader. For more information, visit CLAconnect.com.
CLA exists to create opportunities for our clients, our people, and our communities through our industry-focused wealth advisory, digital, audit, tax, consulting, and outsourcing services. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.
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