Core banking transformation and stakeholder buy-in
People issues are the biggest barriers to acceptance of the need for core banking modernization. The bank must overcome the following challenges in order to secure the buy-in of all stakeholders:
Identify all stakeholders: Transformation has wide-ranging impact, affecting all functions including, but not limited to, IT, Business, Operations, Sales and Service, Risk Management and Finance. It is important to identify and notify all those who will be affected well in advance.
Drive different stages of transformation through the right stakeholders: Contrary to popular perception, core systems transformation is not the exclusive preserve of the IT department, although they have an important role to play. The involvement of key stakeholders changes along the journey. IT may play a large part during initiation, but once the project has the approval of senior management, business users must take centre-stage. Every phase of the transformation life cycle calls for participation from one or several teams; it is vital that the right people are involved at the right time to the right extent.
Involve stakeholders early: Obviously, if the bank expects all key stakeholders to participate in the transformation process, it must get them on board early in the day. This means seeking their contribution at every step, starting with building the business case. Stakeholders must also be involved in key decisions, to the extent necessary.
The right way to approach this is to obtain the backing of senior management first. Once the decision is approved at the highest level, the bank will find it easier to sell the concept among the ranks. At times, senior management may also lend their efforts to securing the acceptance of people down the organization. Once all stakeholders are recruited, they must be assigned clear roles and responsibilities. For instance, many people will be entrusted with execution, others with facilitation and only some with decision making – it is critical that everybody understands what is expected from them.
Assess impact fairly and correctly: Transformation impacts many, if not all people within the banking organization and not always to their advantage. While it is important to assess both risk and upside across the organization, caution must be exercised while making these known. Invariably, transformation leads to hard measures like cutbacks, retrenchment, redeployment and outsourcing; if the messaging surrounding these actions is not delivered with sensitivity and discretion, the project might even be stonewalled. It is equally important to articulate the expected benefits of transformation from the audience’s perspective, in a language they understand. For instance, a risk manager is more likely to give the nod if he understands that transformation will reduce non-compliance by 90%, whereas the call centre head cares more about customer service levels.
Handle the change well: Involving the organization’s change management team from the outset is the key, because they know best how to handle large-scale transition. If the bank does not have such a function, it must put one in place prior to start-up.
Recognize and respect organizational boundaries: Any transgression of organizational policies, ethics, budgets or guidelines must be communicated clearly in advance. The bank must not mistakenly assume that a departure from status quo will always be well received. There should be a separate plan for tackling any negative repercussions of overstepping such limits.
Communicate effectively: Since communication is the key to securing the buy-in of various stakeholders, it must come into play from the beginning and endure over the life of the transformation journey. While only senior executives may be privy to transformation plans in the initial stages, the lower levels of the organization must be progressively brought into the loop. While it is important for individuals or members of a unit to understand how transformation will affect them personally, they must also see the bigger picture, which is, what transformation will bring to the organization as a whole.
