In praise of preparation – Why Banks Fall Short of Realizing Truly Successful Transformations

Three years (on average) three long years of research, study, short lists, procurement, proofs of concepts, board meetings, discussions, arguments, sleepless nights, hundreds of thousands if not millions of dollars, and finally the Bank’s transformation strategy is approved (most likely the strategy includes a Core Banking Replacement).

Now the Executive want to get moving. But wait! Another six months to a year (on average) will be spent picking solution integrators, finalizing contracts with solution providers, and getting the final board approval for the dollars based on a plan that is the initial best guess. The CEO and Board selects the best and brightest from the ranks of the Bank and tasks him or her with a career make or, sadly in most cases, break challenge – Finally execute!

Four years have passed selecting the strategy, the players, and taking the time to get it right. All things a responsible Executive and Board should do. Then in one fell swoop the CEO, Board, and the appointed Program Lead neglect to do the one thing that, more than anything else that will ever be done in during the transformational program, will help lead to success; PREPARE THE ORGANIZATION!

What makes the Executive jump from strategy to execution without sufficient preparation varies Bank to Bank but is common in every major transformation I have ever been involved in. Maybe the fun part seems over. Maybe the strategy sessions, the trips to vendors, the fighting over how the organization will look and feel in the future, and four years of accumulated material seems sufficient to kick off any kind of program. Maybe they need to start spending the board approved project funding as soon as possible. Maybe they are getting pushed by their vendor and solution integrator and other consultants to move along to secure the correct resource (never a reason to start prematurely). Maybe the thought of putting in another 4 months to a year (depending on the strategy and the current abilities of the Bank) of preparation, execution strategy design, and most importantly team building seems less sexy then execution. Maybe they believe that the organization has the current resources required for any transformation initiative. Maybe they think the new third parties will hit the ground running. There are no maybes about it THEY ARE WRONG.

Banks are, by the nature of their business, good at two things; risk management, and efficiently running a bank. Neither of these makes a bank good, or even mediocre, at transformational programs. Years of searching for, and realizing, operational efficiencies within the daily run the bank operations means there is no slack for the current resources to participate in a transformation initiative. This means a dedicated team needs to be created with back fill strategies. Divisions of responsibilities for the transformation strategy needs to be defined between the dedicated program team and the run the bank operational team. New processes need to be defined prior to third parties being on-boarded. As easy as this sounds it is never simple in Banks with defined processes, procedures, and security requirements that are there to keep outsiders out. The program management office processes, internal and external communication strategies, and overall roles and responsibilities, and the supporting incentive programs, all need to be defined before the program kick off.

These are only a few examples of the types of preparations that need to be made before execution of the transformation can begin. Most banks neglect the preparation and they pay for it in both the short and long terms.  Transformation program limps along in the first 18 months without being productive, and since the consultants were brought on-board without the preparation the daily burn rate is high. Lack of planning with the run the bank subject matter experts means they are not available when required and even more money is wasted.

Want  to significantly reduce the total cost of your transformation? Prepare your bank!

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