With transformations failing to deliver with surprising frequency, it is critical that banks identify early signals of underperformance. However, with a wider variety of transformation methodologies in use, and the scope and complexity of programs increasing, obtaining transparent and consistent insight into progress has become a major challenge.
This wasn’t always the case. Only 10 years ago, nearly every banking transformation was delivered via the traditional “waterfall” approach, whereby individual steps in an overarching program of change were taken in sequence. Managers clarified costs and timelines at the outset, making it possible to check at any point in a transformation program whether it was on schedule and on budget.
Many banks have since started to make greater use of iterative and agile approaches to transformation: priorities are continually reassessed; teams convene for short periods of time to address specific problems intensively; and the focus is on fast-paced experimentation, piloting and responsive adjustment.
Within any bank, it is common to find both agile and waterfall transformation strategies progressing in parallel, as well as combinations of the two. This variety, while dynamic, creates reporting challenges. The typical approaches used to measure the progress of waterfall transformations cannot be translated to an agile methodology. It is difficult to assess whether a program is on track when teams have been given the license to change priorities (backlog grooming) as the transformation unfolds.
Further complicating matters, the scope and objectives of banking transformations are changing. In the past, cost efficiency and regulatory compliance were the primary principles. Today, transformations are required to deliver a wider range of benefits, including enhanced customer experience and improved ESG performance. While it is a relatively simple accounting task to prioritize initiatives delivering cost savings using financial hurdle rates, making an objective financial assessment of improvements to the customer experience is more challenging.
Some banks have devoted significant resources to applying waterfall reporting techniques to agile transformations, with varying degrees of success. However, banks now require a reporting technique that is in itself more agile. Only then will they be able to provide boards, shareholders and leadership with the comprehensive — yet standardized — progress reporting, covering the entire portfolio of varied transformation initiatives now required to make effective and efficient decisions.
Many banks are grappling with how to modernize transformation reporting and tracking. But, to date, very few have developed and implemented a comprehensive solution that includes the governance, culture, process and technology changes required to be successful. That notwithstanding, some aspects of leading practice have emerged:
1. Identify ways to express the value of agile transformation.
While it is not always possible to assess an agile transformation against a schedule that may have become outdated as the program evolves, other ways exist to monitor progress and evaluate the final outcome. For example, banks can report on the new features and products the transformation delivers and how they are linked to strategic outcomes, key performance indicators (KPIs) and objectives and key results (OKRs). User stories, which use nontechnical language to convey how the customer or end-user experiences a feature or product, can help articulate the benefits to stakeholders and colleagues not directly working on the initiative.
2. Modernize back-end financial processes.
Many banks’ financial processes have failed to keep pace with their organization’s greater use of iterative delivery methods, such as agile, and continue to provide metrics based on a linear comparison of planned and actual progress. Such a rigid, traditional approach does not suit the cadence or productivity of agile delivery.
Furthermore, such an assessment model, based on traditional financial budgeting and planning processes, is inadequate to capture progress in improving customer experience, for example. Therefore, a back-end transformation of finance processes is needed to accurately and efficiently plan, monitor and report on progress in monthly and quarterly business reviews. This enables continuous planning and prioritization.
3. Tailor reporting to the user.
Executives have varying requirements for transformation reporting. The Chief Product Officer, for example, will be keen to understand whether product enhancements are falling behind schedule. The CFO will want to monitor spending levels and returns. The Chief Technology Officer will need to be kept informed of any technical problems. Executives will also require varying degrees of detail depending on multiple factors, including whether they are personally accountable for the area under discussion, their personality type and the materiality of the initiative.
Currently, transformation reporting is typically produced in one universal form for all stakeholders, albeit with a rudimentary level of tailoring. While this will give everyone a broad overview of progress, it may not provide individual team leaders the granularity of detail they require for the level of responsibility or their functional and operational areas. Some banks are already beginning to recognize this and are working to embed greater click-through transformation reporting covering multiple dimensions, including processes, journeys, value streams and function-specific information.