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Jump-Start Digital Transformation with Change Management

Bailey Barretto, PMP
January 25, 2022
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Change Management Helps Financial Institutions with Digitalization

Bank and credit union executives who manage the people side of digital transformation have more success. 

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Chief Executives' Strategies
Digitalization: a top priority

Digitalization sits atop most financial institution CEOs’ strategic plans for many reasons. Incorporating change management to help with the “people side of change” of digital transformation can mean the difference between success and failure.

 

Drivers of digital change

Whether looking to enhance customer-facing aspects of the bank or credit union, improve operations, or diversify revenue and profit streams, financial institution executives everywhere are looking to buy technology or partner with fintechs.

Banking during COVID, particularly banking initiatives tied to the Paycheck Protection Program (PPP), provided many financial institutions two years of evidence that digital transformation can help provide better customer and member experiences more efficiently. In addition, staffing challenges and regulatory pressures point to higher costs ahead. That has top bank and credit union leaders looking to continue the advances in digitalization that have helped them through the pandemic.

Indeed, 35% of CEOs say investing in digitalization is their top business opportunity in 2022, according to the Independent Banker’s annual Community Bank CEO Outlook survey. Moreover, Cornerstone Advisors found that nearly 9 of every 10 senior executives from 300 mid-size financial institutions said fintech partnerships are important, said Ron Shevlin, Cornerstone's Chief Research Officer, during a webinar reviewing the “What’s Going on in Banking 2022” survey results. That compares with about 5 in 10 in the 2019 survey. 

“In fact, many of our respondents in the survey are seeing fintech partnerships as their primary driver of growth, which is very important,” Shevlin said. 

“Go back a few years ago, and if you asked most of these executives, ‘What’s your primary driver of growth?’ I wouldn’t be surprised if they said M&A. But for 2022, they’re seeing fintech partnerships as their primary driver of growth and seeing it as very important to their overall strategies.”

IT Failures
Change: An obstacle to digital transformation

With so many financial institutions prepared to put resources toward digital transformation, customers or members will see faster, better service as a result, right? And, of course, boards and management should expect improved efficiency?

Not in all cases.

Bank and credit union executives know that, at a minimum, implementing fintech software must turn out well if the institution is to achieve digital transformation. Alarmingly, however, only 31% of software projects are successful, according to The Standish Group.

The good news is that one of the most frequent reasons software implementations fail can be prevented. And it can be prevented with the support of your fintech vendor partner.

Managing the people side of change, or change management, is often overlooked entirely or is an afterthought post-project initiation.

 

Signs change management was needed in past projects

What are some specific signs that change management was needed in a past fintech partnership?

  • Staff have kept manual processes instead of using more efficient automated practices available via previously purchased technology.
  • Other technology initiatives in the past haven’t returned the expected investment or have gone poorly.
  • Staff turnover following an earlier technology adoption effort disrupted business practices.

 

Indications change management could help

What indications should a CEO or executive as evidence that a bank or credit union might benefit from change management assistance to help with upcoming digital transformation moves?

  • The institution has many technology users who will be transitioning to new software.
  • The bank or credit union will go through or recently went through a merger or acquisition and will be/is dealing with cultural changes even as it must combine commercial loan origination systems or other technology.
  • The current systems in use are very manual and disconnected.

Planning for and helping people accept and execute change is vital for software implementation and digital transformation. change management can help digital transformations from manual processesIncluding end-users throughout the implementation ensures they understand and adopt the technology and allows the institution to easily avoid what often derails fintech projects at other banks and credit unions.

7 Steps
Using change management for digital transformation

Here are seven steps financial institution CEOs and other executives can take to jump-start their digital transformation in 2022 through change management of fintech implementation.

Create a vision, starting at the top of the institution.

Focus on areas that need to be improved, asking questions like:

  • What analytics and insights are missing in our reports?
  • What customer service feature could we add to gain a competitive edge?
  • How could we make our lenders’ jobs easier?
  • What processes could be automated?

With an executive vision developed, plant the seeds for staff buy-in by communicating your vision early and often.

Select the right vendor.

Use the vision to select the right fintech vendor to help realize your institution’s goals. Make sure the vendor you choose will:

  • Provide a list of required roles and expectations of the institution’s implementation team
  • Create a checklist and timeline for implementation milestones
  • Assist the institution with improving and maintaining the software

Build internal support.

Ensure your IT team is engaged and ready to assist as needed. Let them know the implementation is a priority and communicate your expectations of them. All divisions need to be kept abreast of the implementation -- especially your management team. Communicate your vision and your expectation that they will support the implementation and be champions for the new software.

Designating an executive sponsor is another key and often overlooked step in digital transformations. The executive sponsor must believe in the vision, have the authority to gather resources, and ensure timelines are being met. He or she must be a valued leader – willing to fill the role of change champion. They must be able to regularly obtain project updates from team members and be ready to report to all stakeholders.

Assemble a project team.

You want team members on the project team who are willing to change, see value in the vision, and encourage others to get on board. This team will help lead communications in your change management plan by word of mouth and deliver positive messages about the implementation’s progress. Select:

  • A project manager
  • A change manager/champion
  • Other team members outside of management

To keep moving an implementation forward effectively, the executive sponsor must be active and clearly present throughout the engagement. He or she must be ready to push the project team members and help make decisions.

Prepare and train end-users.

Plenty of communication with end-users is essential. These members should receive regular updates on the implementation’s progress and “road test” the system along the way. End-users need ample, thorough training. They also need a structured process to ask questions and offer feedback, such as through a SharePoint file or SurveyMonkey survey.

Get ready for launch.

The launch is exciting, but kick-off will go smoothly if you take several actions ahead of time. A good software vendor will provide you with a checklist of everything to do before going live, along with a road map of what happens after that day. Turning off legacy systems and ensuring all users have correct access to the new system are among the steps you’ll need to take.

Enact a post-implementation plan.

A financial institution’s leader could do everything perfectly leading up to going live, but retention rates can fall significantly without a post-implementation plan. The plan should include continued training and improvement, testing new updates, and appointing ongoing ownership of the product. It should also include leveraging the vendor partnership to plan for the future and ensure that your team is satisfied with the product and receives assistance in improving and maintaining the software for the years to come.

 

Conclusion: Generate digital transformation enthusiasm with change management.

Digital transformation can get sidetracked by software implementations that sputter or, worse yet, fail. When that happens, staff and board members lose confidence in the value of making changes that will benefit customers or members and the institution.

By incorporating change management practices into fintech implementation, bank and credit union executives will generate more enthusiasm and adoption by staff. The boost to digital transformation will help drive growth and efficiency while making interactions and transactions easier and more pleasant for your customers or members.

Read more about change management best practices that boost your digital transformation.

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About the Author

Bailey Barretto, PMP

Consultant
Bailey Barretto, PMP, is a Consultant in Abrigo’s Advisory Services, where she works to increase software adoption of clients while boosting ROI and benefit realization to achieve high results. She holds her PMP certification from the Project Management Institute as well as her Change Practitioner Certification from Prosci. Bailey is

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

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