Why Most Bank Tech Projects Fail — And How the Winners Break the Pattern
Banking innovation depends less on the technology purchased and more on implementation strategy. Organizational alignment and cultural readiness are key to fully realize the potential of digital platforms.
By Justin Estes, Contributor at The Financial Brand
Simple Subscribe
Subscribe Now!
A critical gap often exists between technological potential and practical implementation in the financial services industry. Financial institutions must bridge this divide, moving beyond the excitement of new technology to achieve measurable outcomes impacting customer experience and operational efficiency.
On a recent episode of the Banking Transformed podcast, host Jim Marous spoke with Tara Lacey, regional vice president of customer success at Backbase, about ensuring that banking technology investments deliver on their promises through effective implementation strategies.
From Technology Potential to Practical Implementation
Q: From your vantage point over the last several years, what are the biggest changes in how financial institutions buy and implement technology?
Tara Lacey: In terms of buying, they’re looking at ways to get ahead of their competition and create a differentiated experience for their members as credit unions or customers as banks.
As we heard this being discussed, no bank or credit union was seizing the opportunity to buy software or forge partnerships to drive home that differentiated experience for their members or customers.
In terms of implementation, many financial institutions have hesitated to jump into new modern technology, leaving some of the legacy behind because it is a scary area. Also, remember that many chief innovation and digital officers sometimes put their reputations and jobs on the line when making these buying decisions.
But I think through due diligence and understanding what they’re buying, which I think is very important, they can then sell internally the impact and great growth that will come from having more stickiness with their members and customers and just an overall better experience for their end users.
Q: We often discuss the gap between a solution’s technological potential and implementation. What are the most common obstacles financial institutions face when implementing a new digital banking platform?
Lacey: A couple of things. First, there has to be alignment between the business and tech sides. So, I’ve seen in many institutions that there’s not complete alignment between both. And where they could be starting, they sometimes separate and they go in opposite directions. Because at the end of the day, let’s face it, we’re all looking at how it will help ourselves.
Secondly, it’s just the planning, ensuring that you check all the boxes and have a strong implementation plan. One recent customer who just joined Backbase: One of the things I loved about what they brought to the kickoff call was what success looked like to them for implementation.
So, they had the work stream, whether the core integration, the call center, their data strategy, or their security requirements. Then, they had the leader who was the overall owner and then they had the other owners of each work stream. Then, they defined success criteria with the KPIs associated with those success criteria.
So, it not only helped internally that sort of understanding between business and tech and that sync, but it also helped us as Backbase understand what they deem as success for each of those work streams across the implementation and what KPIs we’re also shooting for as partners to ensure successful implementation.
Aligning Organization and Technology for Success
Q: How often do bankers get in their way by trying to do things as they’ve always done while implementing modern solutions?
Lacey: That’s changing, actually, from what I’ve seen. We have seen that in the past. Still, I think with the fast pace of how technology is evolving, I think every leader in a financial institution, whether it be a bank or a credit union, understands that they really need to know what’s out on the market and what can bring sustainable growth for their financial institution.
I am seeing that change. Regarding Backbase, we’re ensuring that every owner or stakeholder is involved to facilitate that understanding across the whole organization, especially during the buying phase.
We have what we call CX workshops. That helps ensure that all of the various owners of each — that’s retail banking, the business banking side, the CTO, the CIO, or the CEO — are on the same page, aligned on what Backbase is bringing to the table and everyone understands the scope.
Defining and Measuring Implementation Success
Q: How do you define a successful implementation? What metrics should financial institutions track to measure the true impact of their digital banking initiatives?
Lacey: So, well, we all define it as MVP going live, but it doesn’t stop there. Many vendors that provided digital transformation software stopped doing that in the past. And they say, “Okay, you’re live. That’s our KPI. We got you live.”
Many folks forget that they are, most of the time, still running on a legacy platform. So, for me, success is when they decommission that legacy platform and a hundred percent of their members or customers are on Backbase. That’s one of the very important internal KPIs.
Externally, I know many of our customers are looking at the app ratings, the onboarding abandonment rate, the number of successful onboarding attempts and the number of abandoned ones. So, those are certain KPIs that our customers are looking at.
I think driving down cost, becoming more operationally efficient and raising their customer CSATs and satisfaction scores are key internally. And then, of course, customer acquisition. So, they’re coming up with this new application, looking at how many additional customers they can acquire and grow and that’s with sustainable growth.
Q: What are some of the most significant performance gaps you’ve seen between what financial institutions want and what they achieve?
Lacey: I think it’s the timing. I think when people set out on this journey, it’s really about how quickly we can get to market, which is very important. But you want to get to market in a smart way. Keeping customers happy during the transformation, keeping those call centers low. So, it’s really about keeping the momentum of this major transformation that’s happening internally and keeping everything business as usual on the outside.
I think one of the challenges I’ve also seen is there’s been a lot of changes in management at some of these institutions. So, you’ll have a whole set of new managers coming in and they look and they say, “Who bought this? What are we really using it for?”
Dig deeper:
- Bridging Digital Banking Implementation Gaps
- Unlocking Banking’s Growth Mode
- How Banks Can Build Revenue Engines from Customer Data
So, it’s almost part of the role of customer success to reeducate those C-level leaders who have come in to take on these digital transformations if they were either abandoned or going in a different direction that the board did not want.
The Customer Success Orchestrator Role
Q: Part of your role is working internally with your Backbase team. Do you have examples of bringing client challenges back to improve your company’s approach?
Lacey: In most of our engagements with customers, my main role as customer success is the orchestrator. I’m here to orchestrate and bring all things Backbase together to support the customer.
One example is one of the customers who came to us and said, “Our competition is killing us. They’re very niche in what they’re providing and this is what we want to do. Can you help us do that?”
We know it might involve some customization. That’s another reason we went with Backbase. We know we can take what’s there, but its flexibility allows us to customize, be nimble and quick and compete against this other provider.
So, we had a product involved. That takes a lot of orchestration to get the right product folks, our solution architect, our business analyst and all of our team aligned, and solutions. We’ll get on a call and we bring the problem, and we’re all solutions as a team. It’s not just the technical folks; it’s bringing the business folks and the value consulting folks, saying, “Okay, this is what we need to do.”
How can we do that most cost-effectively and efficiently in the quickest way so that they can go to market with a new product or a new angle for having a leg up on their competition?”
Preparing for the Future of Banking Technology
Q: As we look to the future of banking, what should financial institutions do today to ensure their technology investments are relevant and valuable?
Lacey: Definitely, they have to keep their pulse on the market. And I think seeing all the changes, we see AI coming, and we see and we hear about all the different digital transformations that other financial institutions have gone through.
So, I really think having a pulse on the market, being vulnerable and learning, taking that vulnerability and applying it to trust and courage and really understanding what is happening with other financial institutions by speaking with other leaders.
We recently redesigned our customer advisory board and we’re taking a really strategic approach. Before our board meeting, we’re having intake calls with each executive to understand what keeps them up at night and how Backbase can support them.
So, I think for any leader … you have to have your own board. Who’s your board of directors? And that might be the real board in a financial institution, but also as a chief digital officer or chief technology officer, whose board? And who are you leaning on to give you this advice to be vulnerable and understand some of the tough decisions that you might need to make as one of these leaders?
