7 minute read 4 May 2023
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Why planning and monitoring are essential in banking transformation

Andy Gillard

EY Asia-Pacific Financial Services Operational Transformation Leader

Transformation leader in Financial Services. Harnesses the power of diversity. Passionate about sustainability.

Jay Subramanian

Partner, Profit Improvement, Ernst & Young LLP

Profit improvement and operational excellence leader focused on cost reduction, productivity improvement and initiative portfolio management. Amateur chef and gardener.

7 minute read 4 May 2023

Growing complexity in the scope and delivery of transformation requires a fresh, lifecycle approach to assessing proposals and tracking progress.

In brief

  • Traditional methods of monitoring and managing the lifecycle of transformation are no longer suitable for iterative delivery models such as agile.
  • Much-needed insight can be gained by modernizing internal financial and governance processes and tailoring reporting transparency to different stakeholders.
  • Transformation funding must be coordinated across the front and back offices and multiple corporate functions. 

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.

A new approach is needed to assess and fund transformation 

As transformation becomes more holistic, delivering value for consumers and employees while controlling costs and improving controls, a fresh approach is required to help leaders plan for and choose the right initiatives. Inter-function tensions frequently arise due to conflicting objectives: the CFO might prioritize transformations that cut costs, the CRO prefers initiatives that reduce risk, and the Chief Product Officer targets programs that improve customer experience.

Creating scorecards that measure each transformation’s potential to improve different areas can help bring clarity. When aggregated, they provide a comprehensive picture of whether the transformation portfolio is aligned with the bank’s strategic objectives. For example, this exercise might reveal that the transformation portfolio is overly weighted to cutting costs, which might be at odds with a wider strategy of improving customer experience. This picture of overall portfolio value needs to be reviewed regularly, with decisions taken to rebalance where required.

The mechanisms by which transformation funding is disbursed to specific initiatives also need to be reexamined. Indeed, securing adequate financing is one of the most significant barriers to delivering a successful transformation. In addition, according to EY Transformation leadership: Humans@center, only a minority (41%) of executives say that money is available to fund new innovations and ideas.1

Banks traditionally evaluate which transformations to pursue based on financial metrics such as net present value (NPV) and internal rate of return (IRR). This means that initiatives focused on DE&I or ESG can be inherently disadvantaged in competitive assessment. Executives should calibrate weightings and rules-based exceptions so that initiatives that do not solely deliver short-term financial returns but could be fundamental to long-term strategy receive a fair appraisal.

Banks should also rethink how they allocate transformation portfolio funding. Historically, banks may have simply initially allocated funding and resource to functions and businesses based on the previous year’s budget, with some minor adjustments. This has resulted in many portfolios being limited to actions and innovations that fit into a preexisting budgetary constraint. The reality is that transforming customer experiences or regulatory compliance often requires input across various functions and also end-to-end. Hence, a conventional, siloed and compartmentalized budgetary framework is not an appropriate funding distribution tool.

Take the mortgage application process in consumer banking, for example. Improving this requires a connected program of work across the user interface, underwriting and customer-service teams, as well as multiple other areas. The budget needs to be simultaneously allocated, with the appropriate weighting, to every function involved in the process to enable successful, holistic and end-to-end transformation.

Questions for banks as they reexamine their transformation-monitoring and proposal-evaluation criteria:
  • How do we know whether our ongoing transformation is really making us more customer-centric?
  • Do we have sufficient insight into the performance of iterative or agile transformations?
  • Which transformation initiatives deliver outcomes linked to strategic and operational objectives, and how are they performing?
  • How could our transformation reporting be tailored to the needs of different stakeholders with minimal manual effort?
  • Are the current metrics we use to evaluate potential transformations biased toward those that deliver short-term financial benefits?
  • How could we better coordinate transformation across the front and back offices?

For more in our banking transformation series, visit Transformation strategies for banking leaders.


With transformation delivery and scope growing in complexity, banks need to modernize reporting and tracking. An agile approach is necessary to provide boards, shareholders and leadership with the transparency needed to continually assess and make strategic decisions related to a broad portfolio of varied transformation initiatives.

About this article

Andy Gillard

EY Asia-Pacific Financial Services Operational Transformation Leader

Transformation leader in Financial Services. Harnesses the power of diversity. Passionate about sustainability.

Jay Subramanian

Partner, Profit Improvement, Ernst & Young LLP

Profit improvement and operational excellence leader focused on cost reduction, productivity improvement and initiative portfolio management. Amateur chef and gardener.