We are running a two-part series on the challenges of digital delivery in the financial services industry. In this first part, we discuss the common challenges that financial institutions in Asia face in delivering transformations. In the second part, which will be published soon, we will discuss solutions to these challenges.
At a Glance
- Delays or disruptions in project delivery can significantly impact operational efficiency and prevent the implementation of your business and digital strategy
- Effective project delivery requires streamlined processes, efficient controls, and comprehensive reporting
- When projects fail to deliver the promised value, the most immediate impact is a waste of financial and human resources
In the finance and banking sector, which relies heavily on digital systems, sub-optimal digital project delivery can have costly consequences. Delays or disruptions in project delivery can significantly impact operational efficiency, customer satisfaction and increase the chances of budget overruns but more importantly, delay the delivery of the overall business strategy.
In this article, we delve into the most common transformation delivery challenges and their subsequent impact on operational and strategic aspects. The challenges here are based on Renoir’s observations and engagement with prominent banks in Asia.
Barriers to transformational change
1. Outdated processes
Organisations often struggle with ingrained legacy processes that are rigid or with employees’ resistance to change. As effective project delivery requires streamlined processes, efficient controls, and comprehensive reporting, organisations need to prioritise tackling the barriers posed by outdated processes. By doing so, they can accelerate digital project delivery, and unlock the full potential of growth.
2. Projects over budget
Repeated budget overruns in digital delivery projects are an indicator of deeper problems in both the planning and execution phases. These recurring budget overruns suggest potential shortcomings in identifying critical resource needs to effectively manage scope changes.
3. Lack of project visibility
Project visibility is the extent to which a project’s goals, activities, risks, and milestones, are available and understood by relevant stakeholders throughout the project’s defined timeline. Project visibility is crucial for effective project management and decision-making, as the information enables stakeholders to identify risks and make well-informed decisions to ensure the project stays on track.
Therefore, when financial institutions lack sufficient insight into their own digital delivery projects, this poses a significant challenge that can result in failure to meet deadlines and budgetary constraints. In the worst-case scenario, this inadequate or limited project visibility leads to inefficiencies, poor decision-making, and increased organisational risk.
4. Third-party vendors/contractors run the show
Does this sound familiar, “Vendors and contractors have so much control over our projects that it sometimes feels like they are running the show”? This sentiment is a common complaint heard by Renoir from numerous financial institutions, expressing a sense of losing control over their digital project deliveries.
The key to successful project management lies in establishing clear accountability. This means that project managers, team members, and stakeholders must have a personal commitment and obligation to deliver high-quality work and achieve the project’s objectives. When individual employees have less hands-on role than third-party vendors and contractors, there is a risk of finger pointing if the project falls through the cracks.
5. Siloed behaviours within business functions and with IT department
Alignment between business and IT departments for seamless collaboration is essential for the successful delivery of digital projects. Unclear communication and siloed behaviours can lead to misaligned priorities, delays, and wasted resources. Financial institutions should foster a culture of collaboration and communication across all departments.
6. Projects fail to deliver value
The hallmark of a successful project is the delivery of its intended value and outcomes. When projects fail to deliver the promised value, the most immediate impact is a waste of financial and human resources.
In addition, projects that underdeliver can result in missed business opportunities or market advantages, that put the organisation at a competitive disadvantage to its rivals. In the aftermath, organisations have to reallocate resources to salvage a failing project, potentially affecting other ongoing initiatives.
7. Projects fail to report and discuss the right key performance metrics
Without accurate and relevant key performance metrics, financial decision-makers lack the information they need to make informed decisions about project direction and resource allocation.
In the long run, without the right metrics, potential problems or risks will not be identified, resulting in inaccurate reporting. Financial institutions must operate within a regulatory framework that requires mandate accurate reporting. As such, it can lead to non-compliance issues.
Your financial institution may have faced some, if not all of the challenges mentioned above. As a result, you may have put certain digital projects on the back burner due to their unfulfilled value. Alternatively, you may be continuing with a project that has exceeded its promised timeline and budget.
Does this mean that these projects are lost? Not necessarily. With the right analysis, planning, and implementation, senior management can revive or improve these initiatives to ensure they deliver their intended value.
Stay tuned for the next part of this series, where we will discuss the specific steps that can be taken in the analysis and planning phases to change the behaviour and culture of the executives and employees tasked with delivering digital projects. We will also look at the project management lifecycle process and management control system (MCS) and why these are important to the successful delivery of digital projects.
My organisation’s digital projects have exceeded their budget.