Smaller banks and credit unions have ever-rising needs for tech expertise, but they can struggle to attract a chief information officer in their markets.
Enter the fractional CIO, an experienced tech leader who takes on the role part-time. Firms that offer fractional CIO services say they’re seeing more demand, as they help financial institutions with digital strategies, behind-the-scenes tech upgrades and data security.
Integrating fractional CIOs into a company’s culture isn’t foolproof, requiring clear communication with employees and leadership. But fractional CIOs can be cheaper, since some financial institutions may be too small to need a full-time salaried CIO. Since they wear similar hats at other banks or credit unions, fractional CIOs can also share lessons from elsewhere in the industry and hazards to avoid.
“If you can fit it within your culture, it’s such an advantage,” says Shea Gabrielleschi, vice president at the IT-focused consulting firm Hartman Executive Advisors.
Fractional CIOs can “look inside the doors of many organizations,” giving them “nimbleness” to quickly work on proven solutions for a variety of tech needs, says Elia Blankenship, a financial institutions consultant at RSM US.
Data on the rise of fractional CIOs is hard to come by. But smaller businesses are adopting them as a middle path between hiring a full-time CIO and bringing on project-based consultants, according to a June 2022 academic paper from researchers in Germany and New Zealand.
“It provides access to highly experienced and seasoned IT executives at a fraction of the costs,” they wrote.
The arrangements are more prominent at banks and credit unions with less than $5 billion in assets, particularly those with $1 billion or less, consultants say.
Sometimes, fractional CIOs come in temporarily to coach staff or fill a gap after a full-time CIO’s departure. Other times, they oversee major projects, such as converting to new core banking systems or helping fix regulatory concerns. Or they can be part of a financial institution’s tech operations day-to-day, providing strategic advice and scaling up work as needed.
“Fractional CIOs come in all flavors,” says RSM’s Blankenship.
Prioritizing investments
There is no shortage of work for them to tackle. Banks continue to invest in improving customers’ digital experience and safeguarding sensitive data. But they’re also adopting new real-time payments technologies and dabbling with artificial intelligence.
Some 71% of banks increased their tech budgets in 2025 compared to a year earlier, with a median increase of 10%, according to Bank Director’s 2025 Technology Survey, which publishes on BankDirector.com next month.
A fractional CIO can help banks assess what to prioritize, says Ken Kulawiak, a senior manager at Wipfli who helps oversee the firm’s fractional CIO services. He recalls one institution that was “completely overwhelmed” by the sheer amount of tech upgrades needed, starting with an outdated core banking system.
Now, they converted to a new core system with cloud-based data. And after developing a strategy for AI governance, the institution is ready to start implementing AI-based tools.
“That’s very typical of a CIO-type engagement,” Kulawiak says. “You think it’s about one thing … and you identify 20 other potential opportunities.”
Gabrielleschi, of Hartman Executive Advisors, recalls one bank that was struggling following expensive investments from their past CIO. That CIO came from a larger bank and invested in tools more equipped for a $50 billion bank than a $5 billion one.
“We were able to come in in pretty short order and eliminate a lot of wasted spending, eliminate a lot of wasted meetings and time and create a lot of efficiencies and accountability,” Gabrielleschi says, ensuring that “IT wasn’t such a sore spot within the bank.”
Building trust
It isn’t always easy to reap those benefits. Trust from employees can be critical to ensuring the model works, according to a July 2023 report from the German researchers, particularly in cases where fractional CIOs are coming in as “change agents.”
Helping employees understand the fractional CIO’s role is key, Gabrielleschi says, preventing hesitance from staff and thus accelerating progress.
“Most banks we work with are very open, especially when the CEO sets the right tone from the start,” he says. “When the alignment is there, we’re able to embed quickly and start making an impact.”
Building trust is also part of the fractional CIO’s journey in getting to know the bank — both its tech capabilities and business strategy.
“We’ll talk to lending. We’ll talk to a branch manager. We’ll talk to compliance, risk,” Gabrielleschi says. “We will try to uncover not only how they feel technology is working, but also: ‘Where’s the bank? Tell us about the culture of the bank. Tell us about the business challenges.’”
Clear communication with top leaders is also essential to achieve success, says Wipfli’s Kulawiak.
“Anytime you bring in a fractional CIO, that individual’s big responsibility is to align with senior leadership and the board,” Kulawiak says, stressing the need for metrics that assess progress that fractional CIOs are making and where more work is needed.
Regulatory overhauls
Defining success and accountability is particularly essential in the financial industry, where supervisors regularly examine banks’ readiness to cyber risks and compliance with consumer laws. The Federal Reserve, for example, said in a November report that its supervisors view cybersecurity “as a high priority given the increasing and evolving nature” of threats.
Sometimes, fractional CIOs arrive after a bank gets a regulatory penalty or warning, Kulawiak says.
A fractional CIO and their security-focused peers — fractional chief information security officers — can help banks unpack the issue holistically and fix the issue at the root, says Wipfli’s Kulawiak.
“When we look at it, and we think about the bigger problem that’s going on, there’s more to it,” Kulawiak says, such as inadequate tools and procedures that need an overhaul.
“That creates a much better environment,” he adds.
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