Financial institutions have a strong belief that technology holds the potential to kick-start growth after a decade of lackluster results. We see this both in annual reports, where 98% mention “digital,” and in interviews with investors themselves, where 80% say digital transformations are important in investment choices. 

But if stakeholders are convinced of the power of technology, why is it so hard to identify performance improvements generated by digital projects? 

Our recent State of the Financial Services Industry report finds that only a quarter of broker reports on banks cite the word “digital” in any capacity, let alone one that differentiates one organization from its competition. Similarly, a third of the investors are skeptical that banks have effective digital transformation strategies in place. 

Why are tech projects dying a slow death? We’ve identified five drivers of their demise and how they can be brought under control.  

Killer #1: A Battle of Opposing Priorities

For any program to deliver, a compromise is needed between how much the leaders want to focus on the vision for the future versus revenue improvement in the short term. Without a balance of the two, projects fail, because either their scope is too narrow to create impact or leaders are so ambitious that they keep spending but never finish. 

The Treasury Committee in the U.K. set boundaries in this area. It stated that if management teams are so focussed on the short term that customers become exposed to risks from old tech systems, then regulators must intervene. 

Killer #2: An Absence of Experts at the Very Top

A clear differentiator between organizations that successfully deliver on technology projects and those that fail is a technical leader on the board or executive committee. A quick glance through the annual reports of the top 10 retail banks in the U.K. shows a clear absence of deep IT, technology or digital experience in most leadership teams. This must change.

There are many benefits to having a senior leader with business acumen and technical know-how. For example, they can ensure new technology capabilities built in disparate parts of the business use standardized and compatible technologies. 

Furthermore, a CIO who has influence only within the technology team is a wasted asset. Working at an executive committee level allows a chief information officer to collaborate with HR to ensure the technologies deployed across the business align with the level of technical skills within the existing workforce or establish a training plan. 

The productivity benefits from most technology projects only come once old systems are decommissioned and staff are freed up from manual tasks to more value-adding activities.

Killer #3: No Plan for Crossing the Finishing Line

There have been cases where businesses are itching to launch a neat new data stack and a fancy app for customers, but missed one vital detail: how to move their millions of customers from the old system onto the new one. 

With the excitement around developing a new product, it is easy to forget about what’s needed at the very end, like data migration or scalability. It’s a similar story for apps. More than half of app development time is needed just to get it working behind the scenes. 

Leaders need to ensure their tech teams focus on what makes a real difference to the project’s main objectives, such as security and reliability, and know what it takes to move from development to testing to launch. 

Always sacrifice scope before quality. 

Killer #4: The Risks of a Modular System Aren’t Addressed

Technology changes so rapidly that committing to a large platform will only leave you behind the times again in another five or 10 years. That’s why we advocate developing a modular system that cherry picks the best components available. 

However, this requires a new approach where every component and link needs to be efficiently tested. In addition to resilience testing, which ensures applications provide an acceptable service level under real-life conditions like an attempted cyberattack, modular systems also need chaos testing. This is where components are deliberately disabled to see how the rest of the system responds. 

Killer #5: Work Stops After the Launch

The challenge isn’t over once the project has finished. The productivity benefits from most technology projects only come once old systems are decommissioned and staff are freed up from manual tasks to more value-adding activities.

Additionally, financial institutions must continue to assess whether a project’s outputs remain fit-for-purpose as technology and their needs change. For example, as the U.K. Treasury Committee recommendations from October 2019 are applied by regulators, banks will be required to demonstrate the operational resistance of their technology, just as they are their own financial resilience. 

After the launch of a customer-facing tech project, it’s time to create a program of improvements and new features based on user feedback. This can be collected via interviews, social listening and the insights generated by the new systems. 

Final Thoughts

Technology projects can be felled by anything from a mouse chewing through a cable to a fundamental oversight of the executive committee. By addressing these top-five project killers, however, banks will be taking a big step forward in creating a competitive advantage.

When Vision and Value Collide is Oliver Wyman’s 23rd annual State of the Financial Services Industry report, featuring insights from a survey of investors, analysts and management teams and analysis of investment levels and progress.