If You Only Have a Hammer Everything’s a Nail – How large consultancies are impeding core banking transformations

When I start working with a bank that is in the midst of a transformation the same questions are always asked:

Why is my initiative taking so long to get traction and move forward?

Why can’t we meet the stated goals outlined by the management consultancy that defined the strategy with us?

I’ve shied away from writing about this common transformation issue and I am not sure why? Maybe it is professional courtesy. Maybe I’m timid about pointing a figure. Maybe it is hard to tell an executive that the millions of dollars they spent with Boston Consulting, or McKinsey, or Deloitte, or Gartner may have given them a high-level and extremely blurry vision of the future “what” and wrapped it up in a cool initiative title but left the bank in the cold on the “how” and failed to mention that the devil is in the details of execution. Maybe by the time a bank reaches out for help to answer these questions and work with a team of professionals that will be there day in and day out to deliver a core banking transformation it’s too late to point fingers and time to put your head down to get the work done.

In any event the large consultancy’s “what” sold the transformation initiative. It was the high-level vision and cool catch phrase that the Board of Directors bought into. It is, in my opinion, the modern day equivalent of snake oil and it has now painted the bank’s transformation initiative into a corner. This corner is the place where everything the executive tasked with implementing the initiative will do will be judged against a strategy and stated objectives that are set in some kind of stone because the supposed “experts” told you so. It makes change to the strategy hard because millions were spent and executives have placed their weight, and sometimes their careers, behind it.

I have written a number of blogs about not treating banking transformation as an IT project, and replacing your legacy systems with a legacy transformational delivery engine. All of these posts have focused on a business centric point of view around how to plan and run your banking transformation initiative. They also speak to what I think are the most important deliverables of a core banking transformation and answer the questions previously asked in this blog.  The issue for me is that when trying to convenience a team of executives that they need to go back to square one and address the short comings of their enterprises delivery engine and structure before moving forward on the “what” provided by the large consultancies is hard and they tend to want to push through regardless of the pain or cost.

The question that should be asked is how did the supposed “experts” get it so wrong? Why didn’t they tell us that our enterprise structure, norms, and culture would cause so much pain? Why didn’t they tell us we needed to address our delivery engine issues first? Why are we so focused on operational efficiencies instead of market growth? What do we do to quickly overcome these issues?

The answer is that large consultancies and banks have structured their processes, culture, and general point of view on a doctrine of operational efficiency and process optimization. This is in effect the hammer in the tool chest of both banks and large consultancies. Since this is the only tool and point of view they have all initiatives are process redesign and operational efficiency initiatives that need a hammer and only a hammer and every issue to be resolved is a nail.

Both organizations fail to realize that a core banking transformation requires other tools and innovative rethinking about processes beyond simple optimization. In every banking transformation I have been involved with the bank and the large consultancies have agreed that process optimization will resolve all issues. If they can only reduce the time a process takes they will reduce expenses and improve the illusive “Time to Sell” within a bank.  They fail to address the inability of the bank’s silo organization structure to implement changes to core processes that span multiple silos. They fail to assess the bank’s ability to ramp up a dedicated project team and get resources from the run-the-bank organization required to support the initiative. They fail to investigate the skills gaps that may exist within the banks current organization and their future plans.

In short business cases predicated on illusive (and in some cases  fictional) capabilities of other banks, or platitudes about improving time to sell, that are not supported by a realistic assessment of the banks ability to deliver is not worth the paper it is written on or the millions spent with large consultancies to produce it. Successful transformations will take a long hard look at their delivery engine maturity, capabilities, and organizational structure and develop a plan to address shortcomings prior to launching a core banking transformation.

There are lots of banking innovation sites that talk about the “what” of innovation and transformation and lots of large consultancies that will be happy to repackage this and resell it to a bank. There are even experts out there that have written books on banking innovation. All of this is useful to a green field bank with no enterprise memory, culture or structure to overcome. It has very little use to an existing bank that has not yet addressed the “how” of delivering these innovations.