It has become a general trend that banks continue to enhance their existing product offerings by upgrading their technology platforms for a better user experience. Many would equate such technology upgrades to “transformation.” These replacements or upgrades are commonly perceived by banks to be the solutions for customer attrition, below average customer experience, and to keep up with competition.
However, these solutions do not come alive easily – only 1 out of 5 major transformation projects will succeed. Moreover, statistics indicate transformation projects run over budget 41% of the time and are delivered behind schedule 30% of the time. Not only are there high costs and prolonged project timelines, these projects usually stall or even get canceled altogether during either the planning, strategy formulation or analysis phases. Such results defeat the original intent to surpass the competition – So what’s wrong? How do you ensure success?
The issue that plagues most banks is not just aging technology, but layers of organizational structure coupled with undesirable organizational behaviors. In most instances, the system issues are results of these poor behaviors. While technological advantage represents a competitive edge, the fundamentals of an organization are too often ignored. Unless banks are willing to examine organizational challenges prior to beginning technology transformation projects, it is likely the same business issues will occur with the upgraded solution.
During a recent transformation engagement, an issue that consistently surfaced during the planning phase was that the functional silos in the bank operated on separate systems. The bank typically used a separate database while having independent customer identifiers and profiles to meet a specific product’s business needs. Although these standalone practices initially appeared sufficient, it hindered the bank’s ability to have a comprehensive view of the customer across functional silos. These functional silos often do not want to give up their way of doing things. This type of reaction is usually the product of organizational behavior. The complexity of the cause is beyond the purview of this blog and warrants a separate blog on this topic. However, to ensure information accessibility, breaking down these silos is essential. It requires extensive resources that are usually overlooked, and is not considered when planning for a transformation project. The barriers in sharing the information from the system may seem apparent from an enterprise architect standpoint but to organizations doing business day-to-day, the core issue is not easy to solve.
This blog only covers the tip of iceberg of transformation project success factors. Numerous academic and business research on transformation over the last three decades state the obvious – that going through a change is a highly complex matter. However, many forget the basic fundamentals of an organization play an important role in setting an organization up for success in a transformation project. To correct these types of organizational behaviors, it requires an effective leadership team to communicate the vision, provide incentives to encourage the right behaviors, emphasize cross-training and education to avoid functional silos and ultimately, empower employees.