Accenture Banking Blog

When it comes to digital, middle market banks want what the big banks have. But they assume it’s out of reach. The refrain I hear from leaders goes something like this: “I’d love to be more digital, but we don’t have a big bank sized technology budget.” Banks go so far down the rabbit hole of what they can’t do to be more digital that some actually end up doing nothing at all.

It’s not an all-or-nothing proposition

But meaningful digital transformation doesn’t have to be an all-or-nothing proposition. This reminds me of one national bank’s digital transformation that I was involved with a few years ago. We worked with the bank to overhaul its .com experience using modern, open-source technologies and completely automated the testing processes. We used an Agile, product-based approach to development. And we did all of it without touching the core processing system.

This project changed everything—and I mean that in the best of ways. The outcomes speak for themselves. Instead of being tied to core processing system release a few times a year, the updates can be deployed daily. Embracing Agile, the developers became more productive and connected to each other—and to their stakeholders. To build on its success, the bank moved other digital transformation projects to this agile, product-based team. It was a win-win-win for the bank, employees and customers.

Where the magic of digital happens

There’s so much in this story that’s instructive for middle market banks. First, it’s a textbook example of where the magic of digital transformation really happens. The interplay between people and technology—not technology in itself—is what made it possible to work and serve customers in new ways. Supporting this human-digital ingenuity should be the golden rule of every digital transformation in middle market banks. Or for that matter, in any organization.

It’s also worth noting how leadership approached this transformation. From the outset, they articulated and communicated a clear burning platform. They never wavered from it. It guided every subsequent decision they made. Having this north star, which might seem like a simple old-school move, brought business and technology stakeholders together. The business leads got what they wanted, and the CIO didn’t have to rip out the entire technology foundation to deliver it.

Five guiding principles for digital transformation

During the early phases of the project, we worked with the bank’s team to lay out a set of guiding principles that put important guardrails around how we would address the burning platform. I advise any bank thinking about digital transformation to do the same. Here are the five guiding principles that I think are especially relevant to middle market banks:

  1. Address the core separately. Contrary to popular belief, digital decoupling is not too expensive for middle market banks. By building new systems on top of legacy systems, banks get the capability and customer experience improvements they want while speeding time to market. It’s all about decoupling from the channel approach for digital power without having to replace the mainframe. If it’s done properly, decoupling provides expedited business results now with the option to address the core later without having to “throw away” work that’s already been done.
  2. Work in Agile teams. Many middle market banks have begun to dip their toes in the Agile water. The benefits of working as a fast-twitch, product-focused team are clear. And if what bigger banks are doing is any indication, Agile is the wave of the future in banking.
  3. Engage customer feedback. Regular targeted consumer focus groups make it possible to solicit feedback quickly, bypassing the typical release, test and learn cycles. An Agile team can act on this feedback, plowing it back into development in an “informed iteration” process.
  4. Make a positive employee impact. It is critical to consider how the digital transformation will impact employees, both the IT professionals implementing the changes and the customer-facing staff in branches and call centers using the new digital tools in their everyday work.
  5. Leverage skilled partners. Leaving aside the traditional “only we can build it ourselves” mentality is freeing. If there is a partner that can skillfully do the work, or a quality product that supports the program goals, explore the value of tapping into such at-the-ready resources.

Take this and run with it

When it comes to digital transformation, forget the big things you can’t afford to do right now. Instead, set priorities and invest in smaller moves that set your bank in the right direction. Please feel free to connect with me on LinkedIn to share your thoughts or if you have any questions.