Accenture Banking Blog

For many middle market banks, IT transformation is constant. Ever since the Agile Manifesto 20 years ago, it’s like we’ve been in a race that never reaches the finish line. Banks implement agile teams. They invest to become more digital. They scale their transformation. Finally, they are closer than ever to enterprise agility. Or so they think.

Then reality hits. In IT transformation, the latest trend in a long string of them always comes along promising to revolutionize everything, and our FOMO (Fear of Missing Out) resets. Despite all their investment of time, money and resources, banks inevitably find themselves back at the starting line, transforming yet again to capture a new utopian vision.

Consider too that it’s not one transformation at a time that middle market banks are shepherding. There are typically many of them competing for attention, resources and leadership. And through it all, there can be debate, disagreement and—sometimes—disillusionment with underwhelming results.

Differentiation hinges on change

This is the reality of transformation fatigue, and I’ve seen many middle market banks caught in this cycle. Not only is it frustrating, but it is also a liability when it comes to meeting customer expectations and fueling future competitiveness and differentiation.

Banks that can break this cycle of fatigue will have a competitive advantage in creating differentiation necessary to compete in the changing middle market banking industry. It used to be that middle market banks could differentiate primarily on their customer experience. Of course, this will always be essential. But future differentiation will be getting functionality into customers’ hands through innovative products that are relevant to how people live.

Doing this requires enterprise-level agility. This is more than having agile teams working in isolation on discrete issues. It demands cross-functional teams of business and technology professionals drawing inspiration from customer needs and motivated by how the bank can service them.

The potential of a product experience

As I see it, this kind of product experience focus plays out in exciting ways that challenge the conventions of how banks have always worked. Take buying a home, for example. Banks own the mortgage business. But what about everything else that people need at this time in their lives—from finding a good real estate agent and a reputable mover to getting the utilities turned on in the new house?

When the focus shifts from “selling mortgage” to “buying a home,” banks can innovate to make the homebuying process easier for customers. They can either orchestrate their own ecosystem of service providers or participate in someone else’s ecosystem. Not only can middle market banks extend their relationships with customers and develop new revenue streams in this way; they can also position themselves to avoid the potential of disintermediation down the road. It all starts with enterprise agility.

When enterprise agility isn’t so elusive

To cure the transformation fatigue and successfully develop and assemble the building blocks for product experience innovation, banks need to reframe all the isolated initiatives into one holistic vision—everything from platform investments to decoupling the core. The goal is to be able to identify and prioritize customer needs, deliver swiftly against them, track the effectiveness of products and services, and adjust on the fly for maximum impact. I talk to middle market banks about these building blocks:

  • Strong value focus. Recentering around value is the first step toward shifting from an application- to a product-oriented mindset. A shared ambition to deliver customer value in new ways brings business and technology teams together.
  • Product owner know-how. Bank leaders must build and invest in product ownership capabilities to achieve this value focus. After all, “product owner” wasn’t even a job title at most middle market banks until a year or two ago.
  • Sensing and responding. Continually refining the ability to sense and respond is key to stay in step with the nature and rate of customer change. Training, labs, dojos, coaching—particularly product owner enablement programs—can provide the foundation that banks need.

From fatigue to faster

I believe that what will set middle market banks apart in the years to come will be their ability to respond fast to customer needs with innovative products and services. The more enterprise agility they have, the more they will be able to focus on the customer transformation happening outside the bank, instead of the cycle of IT transformation happening inside the bank.

Connect with me on LinkedIn to stay up to date on the latest trends in middle market banking.

To learn more about our services and our research on the subject, please visit the Accenture website to download the full report, “How middle market banks can play to win.”
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