Your five principles of transformation
Oct 12, 2022 by Luxoft
How do you achieve the full-scale technological transformation of a financial institution and sleep soundly at night?
The answer is rooted in flexibility, forward-thinking and determination — avoid the pitfalls, meet challenges head-on, keep up with current banking trends and apply Luxoft’s tried-and-tested principles for a successful transformation.
But before embarking on any transformation project, stakeholders need to agree on a definition of the word. Luxoft defines transformation as “an orchestration of strategic programs consisting of multiple projects, with the collective objective of fundamentally changing the direction of a business.” This interpretation can comprise any combination of digital transformation, core banking, payment platforms, operations, cloud and general IT transformation.
One of the fundamental transformational building blocks is appreciating that transformation has both a technology and a business component. Only engaging the technology side of the organization is not enough. For a successful outcome, the business side must also involve themselves in the whole process.
Financial institutions can encounter many drawbacks when commencing a large-scale enterprise transformation.
Organizations feel pressurized to commit internal staff to the transformation effort. At best, this is pointless and, at worst, counterproductive. Most of an institution’s existing talent are so focused on daily business and the way things are done, that they have insufficient understanding, capacity or vision to enable a full-scale transformation.
Another red flag is when an organization has already allocated an arbitrary budget for the project and is looking for a transformation strategy to match the budget, rather than the other way round.
Once you’ve defined the word, you need to decide what successful transformation actually looks like; what it involves and the desired end result. Committing a big spend and raising expectations without examining the finer points is bound to lead to disappointment.
Luxoft teams are often faced with a client’s belief that transformation is purely about technology. In fact, the hardest part of transformation isn’t the technology at all. It’s the business side of it. Like working out who are the key players, and getting support from decision-makers high up in the organization who can authorize necessary operational changes. This process has to involve both the business and technology sides of the organization, working in sync.
The final pitfall is setting an unrealistic timeline. A large, full-scale enterprise transformation — especially in core banking — is measured in years. As the man said, if a job’s worth doing, it’s worth doing well. Setting an arbitrary timeline of between 6 and 12 months is not realistic for technological and organizational change on this scale.
So, that’s what you need to avoid, but how do you achieve success? Banking is a fast-moving industry, so here are some current trends that ambitious organizations are keeping an eye on:
On top of investigating these new banking trends, review any barriers that stand in the way of success.
Financial institutions are complicated ecosystems and most have considerable technology debt. As well as expensive and inefficient legacy systems, many institutions have devolved business decisions, complex processes and the knock-on effect of decades of ad hoc integration, that need to be resolved. Remedying these issues can be a convoluted process, a multi-year journey which requires full dedication and commitment to the outcomes.
The first couple of years of a transformation program are often about just getting to grips with what an organization already has, as much of what accrues over time is light on documentation. So, institutional knowledge retention can be a significant issue.
Keeping in mind the pitfalls, trends and challenges, how do you achieve transformation? Luxoft’s tried-and-tested approach involves five basic principles:
Intrigued? Visit luxoft.com/banking or contact the Luxoft banking team at firstname.lastname@example.org to learn more about how we could add value to your transformation.