Part 4: Core Banking Transformation – From Coal to Diamonds

Part 3: Core Banking Transformation – From Coal to Diamonds
July 9, 2018
The Top Three Reasons for Considering Core Transformation
July 12, 2018

Part 4: Core Banking Transformation – From Coal to Diamonds

There is a story told of a gem expert who was asked by the queen to help her display her most beautiful diamond. He worked tirelessly, weeks on end, to create the most ornate, exquisite, gold-gilded box of which he could conceive.

On the day of the exhibition, the diamond was placed carefully in the box for all to see. However, as crowds of onlookers peered into the casing to view the gem, an unexpected thing occurred.

Instead of being dazzled by the beauty of the gem, the crowds were mesmerized by the container. It had overshadowed the priceless prize it housed.

Parlaying this analogy into a core transformation effort, there is a danger that the structure of the program (the box) could overshadow the actual work (the gem). When this occurs, distractions, unnecessary work and dysfunction can result, causing time delays and cost increases.

The Right Structure is the Right Answer

As a refresher, Part 1 of this series briefly addressed some questions that need to be asked and answered of executive management to inform any transformation, particularly a core banking transformation. Part 2 shared some strategic principles that could be utilized to help lay the groundwork for the initiative. Part 3 outlined the need for a readiness assessment in preparation for such an effort.

Structuring the effort properly – and avoiding the pitfalls –
will mitigate the silo effect.

This installment, our final part, outlines recommendations on structuring the effort, along with some pitfalls to avoid.

Note that these recommendations, while not groundbreaking or unique to core transformation efforts, are a logical next step in how to think about these initiatives. And, while the intent is to give a glimpse into a few of the things that can be addressed, there are a bevy of other lessons learned that go beyond the scope of this article.

Finally, as a reminder, the intent of this entire series is to share thoughts, concepts and approaches that can help Mitigate Risk, Stabilize Cost, and Increase the Likelihood of Success.

The Program Structure can be thought of in three dimensions:

  • Risk Management,
  • Governance and
  • Execution.

Risk Management Structure

The Risk Management Structure provides assurance the effort is not subjecting the organization to undue risk.

The Risk Management team needs to take in active role in helping the project management team understand the danger areas, both within the organization and the project. As the “second line of defense”, their work should be relied on by external risk management groups and Internal Audit.

Having sufficient coverage and capacity in the Risk Management space is key, otherwise misalignments of expectations are quick to surface, resulting in noise, politics and protectionist behavior as groups become quick to point the finger when things go awry. We all know that in any type of transformational effort, all groups must be aligned and rowing in the same direction or the boat doesn’t reach its destination.

The goal is to function in a place of risk mitigation. The risk management specialists engaged on the project need to aid the project management team to proactively prevent risks from becoming issues; helping them function in a place of active management, as opposed to administration.

Governance Structure

The Governance Structure provides a formal oversight model, ensuring the effort receives appropriate attention from executive management, while providing a channel for key decisions and accountability.

A Governance Structure may look great on paper (the box) but could be a significant administrative burden on the project (the gem). The key is to find the right balance between being effective, lightweight, but sufficiently informative for decision making. It also should not be confused or merged with Stakeholder Management; a clearly defined, crisply executed communication approach can ensure decision oversight and stakeholder management remain separate.

Execution Structure

Note that while the sections on Risk Management and Governance are brief, I’m going to deep dive a bit on Execution structure due to its multi-faceted aspects; aspects which include not only the execution structure itself, but the people-oriented challenges.

The key to project success is an execution structure that allows for optimal flexibility in execution, while preserving autonomy and avoiding tribalism. (By tribalism, I mean an “us versus them” mentality). An optimal execution structure helps clarify roles and responsibilities, which is critical to ensuring a well-functioning project team.

Leaders and other key individuals from inside the organization should represent the interests of their function, this ensures that requirements, expectations and designs are articulated correctly upfront, thus avoiding rework down the road.

An execution structure that is built to accommodate the work, such as a workstream model, will see to it that silos are kept to a minimum, as well as ensuring that teams have pride of ownership in their work product from beginning to end.

A workstream model helps avoid the pitfalls that occur in siloed project team structures, such as

  • Each team being so focused on their own work that taking the long view of the effort is difficult at best,
  • Hand-offs that result in things getting lost in translation, as the original meaning and intent of previous requirements are not understood,
  • The steep learning curve that the receiving team must endure, often without support from the team that “threw the work over the fence” because that team has now moved on to other, more pressing priorities.

The result? Resource contentions, turf wars, and project priority disagreements.

The timing of when to engage resources is critical as well, as it will ensure an accurate, quality solution that minimizes rework. For example, when should the system analysts be engaged? Test engineers? Developers? Data analysts?

Regardless of the size of the team, the work locations (on-site or remote), or the employment status (employee or contractor), there will be organizational and people management aspects to be considered, and processes to be established and developed. As noted in previous installments, attracting and retaining the right resources is vital – it is one of the penultimate aspects that needs to be absolutely on-point to ensure success. Selecting the right resources and partners, and then ensuring that policies and practices are in place that incent and retain these resources and partners, will ensure consistency in practice, set expectations, and eliminate guesswork.

In Closing

Ensuring the optimal risk management, governance and execution structures are critical to success; ultimately, the “box for the gem” should help reduce relationship friction, speed productive action and decision-making, and promote teamwork, trust and accountability.

What has been provided in this whitepaper is the set up for the effort; the next logical step is execution, the real work where the gem is mined, cut and set.

Looking toward execution, there are many lessons learned that can be shared from past Core Transformation efforts – learnings that apply to all phases of the project, from Initiation and Planning, to Analysis and Design, to Development, to Test, to Rollout and Implementation. Samples include

  • the pros and cons of using a waterfall versus Agile approach,
  • how to optimally structure and execute requirements phases, and
  • how to think about screen design, data conversion, triage approaches during test.

Along with strong executive leadership and support, having the right team and the right experience behind you as you tackle this type of effort is absolutely critical to success.

If you feel we can be of help in your Core journey, please feel free to reach out; we would be thrilled to share further actionable information that can help you minimize risk, stabilize cost, and increase the likelihood of success.

In a core transformation effort, all parties engaged will feel pressure – pressure they may not have experienced previously. When we take the time to get clarity on our vision and set the project up for success, we can transform legacy coal into cutting-edge diamonds.

CLICK HERE to receive a complimentary PDF of the complete Core Banking Transformation – From Coal To Diamonds whitepaper.

 

AARON SCHLENZ, Managing Director, Core 20/20 LLC

Aaron Schlenz is a creative and dynamic financial services executive who has made a career of delivering groundbreaking and transformational efforts in support of business strategy across a wide spectrum of domains, including application, governance and operations. Complimenting his expertise as a highly effective cross-functional collaborator bridging operations, business and technology, Aaron possesses a natural ability to identify customer needs and partner for results, tackle ambiguous, complex problems, and develop workable solutions. Utilizing his skills in program and project management, execution strategy, and transformation, Aaron managed the successful Zions Core Banking Transformation program, with responsibility for planning, delivery and governance. In addition to Zions, Aaron has deep financial-services transformational experience with Fannie Mae and Freddie Mac. Aaron took his skill set and leadership experience and partnered with John Kershner to create Core 20/20 LLC. Aaron received his MBA from Mount Saint Mary’s University in Maryland, and his B.S. in Accounting from Illinois State University.

JOHN KERSHNER, Managing Director, Core 20/20 LLC

John Kershner is an executive leader with proven experience developing and executing strategies that deliver bottom line results utilizing creative abilities, knowledge and skills gained as a management advisor and coach. Key areas of interest include strategic technology management, business process improvement, change management, and organizational design and development. John successfully led three large core banking transformations and many other core and non-core technology improvement and replacement initiatives. Most recently, John organized and led the program for the first U.S. implementation of the TCS BaNCS global core banking platform at Zions Bancorporation. In 2018, John partnered with Aaron Schlenz to create Core 20/20 LLC. John received his MBA from The University of Texas at Austin, and his BBA in Finance from the University of Houston.

 

With proven leadership, real experience, and demonstrable results, we exist for no other reason than to ensure your success! To learn more about how we can partner to help you realize your vision, please contact us.

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