By Achim Enders, Delivery Executive, Global Financial Services Consulting, SAP
Its familiar territory in the banking industry – fresh young competition comes along with exciting new products and services while an established bank’s legacy infrastructure hinders its ability to compete. Add to that customer demand for real-time banking and regulatory pressure for faster reporting and banks throughout the world are looking to make an IT transformation.
How can banks minimize the disruption, time, and cost of this transformation?
Banks that need to change their core, get products to market quickly, and adhere to regulatory demands must prioritize, simplify, and reduce complexity by working collaboratively with their IT and services provider. Here are lessons learned from our experience working with some of the world’s largest banks that led to successful bank transformations.
Take out the complexity at all levels, not just in the IT landscape
Most of the banks we work with that are planning a transformation have a legacy mainframe infrastructure that’s decades old. There is incredibly complexity in these homegrown landscapes and banks are struggling to innovate in this environment. For some banks, it takes more than a year of programming to introduce a new product.
Transforming this environment requires a lot of change – not just to the IT landscape, but to the way the business is run, how decisions are made, who makes the decisions, and who approves them. It can be a very tangled and complicated process. Therefore, the first steps in a successful transformation are:
Establish trust and a governance model
With a large-scale transformation, there are many parties involved. You have to rely on each other to keep the momentum going and building trust is a key step to ensure reliability. It seems like a simple step, but a key way to establish trust is to follow through on all of your promises. If you say you’ll follow up on something or send an e-mail, make sure you do it. Then when it comes to the larger commitments, like meeting a deadline or completing a deliverable – everyone will continue to do their part instead of waiting for someone else to follow through on a commitment. This goes for everyone. Trust is essential.
A governance module describes who will do what and the process for decision making within the project. This step helps to avoid overwhelming the process with too many people interjecting thoughts, opinions, and suggestions that can distract stakeholders and derail the project. Even little deviations add up over time to create complexity. Nip them in the bud with a governance model.
One service lead that rules them all
Similar to the governance model, make sure one person is designated as the lead of all the third parties involved with the transformation project. This helps minimize fatigue and having to answer questions more than one time. Set a weekly meeting led by one person where all of the various stakeholders can discuss the project, milestones, obstacles, and successes. That will help keep the momentum going and miscommunication to a minimum.
Take the complexity out of too much choice
To really embark on a roadmap to innovation, banks need to reduce the number of custom modifications and adopt standardized processes and solutions. Complexity must be removed from the existing IT infrastructure. However, there is often a gap between what the board wants to achieve and what is happening within the lines of business.
There are often different interests among different bank practice areas. If you are not really careful, you could end up rebuilding processes similar to the old way of doing things because that’s what’s familiar and comfortable. To avoid that, follow the next step.
Prioritize, prioritize, and prioritize some more
When facing pressure to deviate from standard processes, it helps if your stakeholders understand all options, and the costs associate with each. Then you can prioritize what you really need and what the business needs. You can offer the options of standard best practices versus a custom solution to the board and let them judge the value of the various options. Then you’re likely to see that your bank’s processes are not so unique that a custom solution is in order.
See the value in a shared vision
Managing a line of business differs from managing a project. Many banks are not equipped to manage large transformation programs and need outside help. Systems integrators very often follow their own agenda and try to overcomplicate in order to maximize revenues.
You and your software provider most likely have similar objectives. You want a quick and easy transformation that’s on time and within budget. Software providers ultimately want to sell more software, so it’s in their best interest that you have a positive experience. That’s a built-in incentive for them to deliver services that are on time and on budget.
Even with all of this preparation, there is the possibility that the journey could be bumpy. Let’s face it – you can’t foresee every issue at the beginning of a transformation. But working with a reliable partner that will go the extra mile to help ensure a positive outcome can help make the path as smooth as possible.