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Common pitfalls in core banking transformation
Throughout various transformations, we frequently see the same problems recurring. Awareness of these pitfalls and their root causes can help organizations avoid or mitigate them. Typically, these issues stem from various factors, including:
- Overemphasis on new technology
While banks often focus on the advantages of new technologies, they may underestimate the implementation work required. As they transition to cloud-based platforms and technologies like banking as a service, it is crucial to develop and follow a well-defined cloud readiness strategy to help ensure seamless integration and maximize benefits.
- Underappreciation of legacy systems
A successful transformation program must consider the challenges posed by current legacy systems. These can include incompatibilities with modern technologies, issues stemming from previous customizations, data inconsistencies, regulatory compliance requirements, and the complexities of integrating new products and channels. It’s therefore essential to complete sufficient “big design” work upfront, even within an agile hybrid delivery model, to facilitate a successful transition to a simpler IT landscape.
- Underestimating strategic vision
Leadership teams often recognize the need for a clear vision and strategy at the outset of a transformation. However, ongoing strategic thinking and course correction are necessary as projects unfold, especially given multi-year timeframes, potential complications from legacy or new technologies, and the need to orchestrate overlapping transformation elements.
- Box-ticking mentality
While methodologies like agile working and continuous improvement offer clear benefits, embedding them takes sustained effort. Organizations must embrace the full spirit of these approaches rather than just going through the motions. Cultural change and commitment are essential; for example, a daily scrum meeting won’t achieve much if participants lack understanding or dedication to this style of working.
By recognizing these dangers, leadership teams can make more informed decisions that align with their organization’s needs, capitalize on opportunities, and reap the benefits. An effective transformation can even catalyze broader cultural change and customer centricity across the organization.