Renovating Your Way to Your Core Banking Transformation

When considering core banking transformation most banks start with a blank slate and work on the development of an aspirational core end state vision. Usually this vision includes the selection of a strategic core banking solution. The aspirational end state is normally intended to move the bank to a single platform, standardize master data through out the enterprise, and provide a clear view of all business processes while meeting stated business benefits.

The development of a strategic core banking aspirational end state is not a problem that needs to be solved. The third step of any core banking transformation (after the identification of the bank’s unique transformation imperatives, and the recruitment of the senior transformation team) should be the development of, and detailed elaboration of, this vision.  Problems start to arise after the initial core banking end state vision is developed.  At this point most banks want to immediately communicate this vision to their internal teams, shareholders, and industry analysts. Banks communicate the vision without a clear path to achieve the vision. Banks are defining the “what” but not the “how”. When a bank communicates the vision and the start of the core banking transformation program to multiple stakeholders at the same time expectations are set. They have effectively painted themselves into a corner .

Quick wins, and the early achievement of business benefits are required to keep momentum of core banking transformations going. It is also required to provide the transformation team with the confidence of the enterprise, which will in turn earn them the right to do more. When you approach the transformation with this frame of mind the aspirational end state becomes a series of core banking renovations based on a framework of the strategic aspirational end state.

How do you achieve this?  Once the aspirational end state is defined start focusing on the “how” taking the realities of the enterprise into consideration. Develop a roadmap of smaller core banking renovations that will ultimately lead to the transformation that the bank aspirers to reach. Biting off more than the bank can chew, based on tradition, enterprise memory, existing competencies, and organizational structure, by kicking the program off based solely on the aspirational end state is common. This ultimately leads to early realization that the scope is too large and requires the team to rethink the initial plan. This generally reduces the confidence of the executive and the enterprise in the transformation team and gets the transformation off on the wrong foot.

The communication to the executive team needs to focus on the aspirational end state focusing them on making strategic decisions supporting the aspiration. The communication beyond the executive team to the enterprise should be based solely on the quick wins and the initial steps of the roadmap. Communication to the wider public including analysts and shareholders should be limited to go-live announcements in the early stages of the roadmap. Progressively elaborating the level and detail of the communications to these groups as the transformation renovations are implemented successfully will elevate the pressure on the transformation team, the bank executive and the entire enterprise. Giving the enterprise time to digest quick wins and build internal capabilities around the new core banking systems and processes will build confidence and allow them to move toward the aspirational end state with more success as the roadmap and transformation renovations continue.

Successful transformation initiatives will:

1. Develop a strategic aspirational end state

2. Assess enterprise capabilities

3. Develop a realistic roadmap

4. Control communications

3 Responses to Renovating Your Way to Your Core Banking Transformation

  1. This is an exceptional piece – well done!

    I have spent a fair amount of time across the African continent the last 6 years or so – delivering CB Solutions for 2 different Technology Vendors at a range of Banks – and I can confirm that all of them (apart from one) have fallen into the same trap.
    Immense pressure is put on the Technology Vendor to produce a miracle on not only delivering a solution that works (while fending off the Banks’ constant demands to customise away from a specifically bought Global Best Practise solution) but at the same time having to manage Bank wide expectations (out of contracted scope) around what & how the chosen solution will transition the Bank.
    This in a manufactured “hostile environment” resulting from inadequate Stakeholder & Communication management as described in George’s article above – written in 2011 but still very relevant (and happening) today at Banks – specifically in Africa.

    Common Africa – we are better than this – lets lead the way and clean up our act!

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