7 steps for a successful technology transformation

7 steps for a successful technology transformation7 steps for a successful technology transformation

There is no doubt that core banking revolutionized the financial industry, making it possible for banks and credit unions to quickly share data across a networked group of branches. However, with the first core implementations now looking at a lifespan crossing nearly half a century, financial institutions are beginning to retire these banking workhorses in favor of modern, more efficient platforms. The goal is to reduce costs, increase internal efficiency and more easily meet emerging consumer demands for new products and services.  

As banks and credit unions begin the process of adopting new technology, it’s important to take a comprehensive approach to the transformation, following 7 basic principles.

1.    Define the Business Specific Needs

To be successful, any technology transformation should address the needs of the business. According to PwC, the top drivers for banking innovation are the need for new products and  channels.i  However, the modern core goes well beyond meeting the bank or credit union’s most evident needs with the capacity to reduce costs through increased efficiency. Defining which of these goals you expect to reach with a core modernization will direct the rest of the transformation journey.

2.    Determine Your Scope and Stick to It

Once you’ve identified the full range of needs your project should address, take time to establish the project scope. Some financial institutions are seeking to update the account holder information file. Others only want to refresh the general ledger. A great many want to do both.

Scope is all about the range of the project, including whether deployments are made in small steps or all at once. Sticking to it will keep costs in checks and help to ensure you realize a return on your investment

3.    Inventory Functional Requirements

Before making technology changes, it’s important to have a complete picture of the landscape, including how alterations to the core will impact all interfaces, connected systems and functions. Because any changes to core systems will have immediate and long-term impact across the organization, the committee in charge of making decisions and selecting a provider should work with teams across the community bank or credit union to inventory their needs. It is critical to have an organization-wide view of the systems, processes and individuals that interact with the core before determining any functional requirements.

4.    Choose a Technology Partner

According to the  Independent Banker’s Community Bank CEO Outlook survey, attracting qualified technology talent remains a top 5 challenge for banking professionals.ii   PwC, however, reports that banks of all sizes can reap the benefits of innovation by working with third parties, including Fintechs, academic institutions and non-bank players. The idea at this stage is to identify which needs can be met in house and find third parties to partner on the rest. For most community banks and credit unions, this includes identifying a vendor to provide the core solution.

5.    Take the Top-Down Approach

Executive investment in a core replacement goes well beyond financial buy-off. According to McKinsey, seventy percent of large-scale change initiatives fail to reach their goals.iii  The success stories have one thing in common. Leadership embraced the project and set the tone for the organization at large.

6.    Ensure Consistent Vendor Involvement

A core provider should be your partner in transformation, offering consistent support throughout your journey. Facilitating this level of involvement, however, is partially up to the bank or credit union. Be sure to stay involved through user groups and events and take advantage of ongoing training, even after the transition, whether offered as a complimentary or paid benefit.

7.    Think About the End

At some point, all good relationships outlive their usefulness. If you’ve followed the steps above, that should be years, if not decades, down the road. However, if the time comes prematurely, it is nice to have the option to step away gracefully. Setting up a reasonable exit clause from the start can ensure this happens.

Evolving the Core Doesn’t Have to Be a Nightmare

Adopting new core systems is no longer the chore it used to be, thanks to innovations in technology. Community banks and credit unions now have options to house the core on-premise or through cloud-based solutions. Each approach can easily provide the feature-rich atmosphere and time-saving functionality that financial institutions need to remain competitive today.


i  “Retail Banking 2020 Evolution or Revolution?” PwC, 2020. Web.
ii  “Community Bank CEO Outlook 2020: How Your Peers Plan to Grow.” Independent Banker, Jan. 1, 2020. Web.
iii  Michael Bucy, et al. “’The ‘How’ of Transformation.” McKinsey & Company. Web.