2️⃣ Bold Overhaul - Embracing a Future Unburdened by the Past

The complete overhaul approach takes a more audacious path, aiming for a clean slate by replacing the entire technology stack with modern, integrated systems. This bold move unlocks several benefits, including fostering agility, scalability, and future-proof technology. Streamlined operations and potential long-term cost reductions are alluring prospects. However, this disruptive and resource-intensive process carries significant implementation risks, with high upfront costs and the potential for delays and budget overruns. The loss of institutional knowledge and expertise embedded in legacy systems also presents a challenge. Poor planning and execution can lead to chaos and operational downtime, while neglecting employee training and change management can breed resistance and hamper adoption.

Some incumbent banks, such as the Commonwealth Bank of Australia, are known for successful bold overhauls, albeit at very high costs, while others, like Deutsche Bank, didn’t succeed.

3️⃣ Collaboration for Innovation: Harnessing the Power of the Ecosystem

Instead of a complete overhaul, the ecosystem integration approach focuses on weaving legacy systems into a broader digital tapestry. This strategy leverages the expertise and innovative solutions of fintech partners, enabling faster time-to-market for new features and functionalities. It allows banks to utilize their existing legacy systems while adding modern capabilities. However, finding compatible partners with secure and reliable solutions is crucial. Managing data security and privacy concerns when integrating with external systems presents another challenge. Potential vendor lock-in and dependence on external partners must also be carefully considered. This approach can stumble if clear governance and collaboration frameworks are not established, leading to confusion and inefficiencies. Overreliance on external solutions can weaken internal development capabilities.

Spanish BBVA and Singaporean DBS are well-known banks pursuing an ecosystem strategy.

BBVA is recognized as a pioneer in open banking and boasts a successful ecosystem approach. Their robust API platform has spurred numerous fintech partnerships, fostering innovation in their customer offerings. While specifics may evolve, BBVA's commitment to collaboration positions them as a driving force in shaping the future of finance.

DBS boasts one of the most comprehensive and accessible API platforms in the banking industry, with over 200 APIs spanning various financial services. Their dedicated focus on collaboration and developer enablement has made them a leader in open banking, particularly within the Asia-Pacific region.

4️⃣ Building a Greenfield Bank: Unburdened by History, Empowered by the Future

The greenfield development approach takes the most radical path, starting from scratch to build a new technology infrastructure, free from the constraints of legacy systems. This offers unparalleled flexibility and scalability, allowing banks to design systems tailored to their specific needs. It fosters a culture of innovation and agility from the ground up. However, this significant undertaking requires substantial upfront investments and carries the risk of abandoning past investments. Banks may lack the institutional knowledge and expertise needed to build and maintain complex systems, and this approach often carries a longer implementation timeframe compared to others. Ignoring lessons learned from legacy systems can lead to repeating past mistakes, and underestimating the complexity of building and integrating entirely new systems from scratch is a significant pitfall.

When I consider examples like Revolut, Starling, J.P. Morgan's Marcus, Commerzbank's ComDirect, or Deutsche Bank's Bank 24, among others, my takeaway is this: a Greenfield approach works well for startups, but there's no track record for incumbents.

Beyond Technology: The Human Factor in Transformation

It is vital to remember that transformation is not solely about technology. Effective change management, cultural shifts, and employee training are essential for the successful adoption of any approach. By addressing these human factors alongside the technological considerations, banks can ensure a smooth and successful journey towards a future-proofed financial institution.

A Dynamic Journey

Transforming a bank with legacy technology is a complex and multifaceted endeavor. Each approach offers unique advantages and drawbacks, and the ideal path depends on individual circumstances. By carefully considering their specific needs and resources, banks can navigate the maze of transformation and emerge as agile, future-proof institutions in the ever-evolving financial landscape. Remember, the journey is dynamic, and continuous evaluation and adaptation are crucial for navigating the twists and turns towards a successful future.

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1️⃣ Evolutionary Forces in Banking

The banking and finance industry undergoes significant evolutionary forces, marked by non-physical products, high competition, and escalating costs. Ulrich Cartellieri's 1990 assessment of German banking as the "steel branch of the 1990s" resonates today. With up to 50% more bank branches than gasoline stations, questions arise about the need for such proliferation in a digitized era.

2️⃣ Strategy Formulation and Execution Gap

The challenge lies not in lacking awareness or foresight among decision-makers but in bridging the gap between formulating and executing strategies. Alignment in understanding, ownership, accountability, incentives, and corporate culture is crucial for successful implementation.

3️⃣ Missing Ownership and Incentives

Strategies falter when those tasked with execution lack a deep understanding and ownership. Incentives play a pivotal role, aligning personal goals with organizational objectives. Without the right motivations, even well-intentioned strategies can fail.

4️⃣ Lost Core Business Focus

Failure occurs when banks deviate from the core of a functioning business model. For instance, neglecting payments, a core function, can jeopardize consumer and merchant retention. The importance of focusing on the essential aspects of banking cannot be overstated.

5️⃣ Unrealistic Profit Goals

Prioritizing unrealistic profit goals over a sustainable risk portfolio is a recipe for failure. Striking a balance between profitability and risk management is crucial for the long-term health of a bank.

6️⃣ Implementation Challenges

Even well-crafted strategies can falter due to challenges in implementation. Banks may excel in devising strategies but struggle with the practical aspects of bringing them to life, including project management, resource allocation, and change management.

7️⃣ Poor Leadership and Communication

Leadership, from the top to middle management and front-line employees, plays a key role in strategy execution. Communication gaps and a lack of understanding at different levels can lead to poor implementation.

8️⃣ Lack of Consistency

Consistency is crucial for successful strategy implementation. Shifting strategies due to leadership changes or lack of continuity can impede progress. Successful strategies often have clear objectives that remain unchanged throughout their execution.

📌 Conclusion

In conclusion, the failure of banking strategies stems from a combination of factors, including leadership issues, a lack of alignment between strategy formulation and execution, and challenges in adapting to industry evolution. Understanding the core functions of banking, setting realistic goals, and fostering a culture of innovation are vital steps toward sustainable success in an ever-changing financial landscape.

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Christopher Schmitz Clare Walsh Ewan MacLeod 

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Michael Harte         Rajeev Kakar Rene Gruner 

Robert Caplehorn Tim H. Wolf Wössner

When seeking to understand the key reasons for the failure of strategy implementations, one can pinpoint recurring themes such as ‚inability to manage change,' 'conflicts with established power structures,' 'encountering cultural resistance,' and 'ineffective communication.' Consequently, achieving success in your business transformation efforts greatly relies on your ability to comprehend and navigate the individuals and dynamics you will encounter.

Let's examine a specific component: strategy meetings. Strategy meetings play a crucial role in helping organizations achieve their objectives and propel their implementation efforts forward. However, these meetings can sometimes encounter disruptions in the form of Zebras, Wolfs, Hippos, and Rhinos - colorful metaphors for challenging personalities that can negatively impact the decision-making process.

Let’s have a look at the characters first: 

The ZEBRAs “Zero Evidence But Really Arrogant”

Zebras, often hailed for their confidence, can unwittingly sabotage strategy meetings. Their penchant for asserting opinions without factual evidence can derail discussions and lead to decisions grounded in subjective views rather than objective data. Their arrogance may stifle alternative viewpoints, creating an echo chamber of ideas.

The WOLFs “Works on Latest Fire”

Wolfs thrive on tackling the latest fires, often at the expense of long-term strategic discussions. Their ability to focus on immediate concerns can divert the meeting's attention and impede progress toward long-term goals.

The Hippo “Highest Paid Person's Opinion”

Hippos, often revered due to their position, can unintentionally cast a shadow over other voices in strategy meetings. Their opinions, given undue weight, might suppress diverse perspectives and discourage open dialogue.

The Rhino “Really Here In Name Only”

Rhinos, while physically present, may lack active engagement, leading to unproductive meetings. Their passive presence can hinder meaningful discussions and lead to missed insights. 

It is not about getting rid of the wild animals - it is about taming them

While Zebras, Wolfs, Hippos, and Rhinos are wild animals they also come with benefits. A Zebra may have innovative ideas and a diverse perspective that stimulates the strategic discussion. The wolf is able to address urgent matters swiftly and effectively and has skills in crisis management and quick problem-solving which can be valuable in certain strategic situations. And a hippo can bring to the table their ability to provide strategic direction, guidance, and decision-making based on their experience, expertise, and authority within the organization. And the main benefit of a rhino is their potential for passive observation and awareness. Their presence allows them to absorb information, gain insights into ongoing discussions, and stay informed about the organization's direction and decisions.

The influence of Zebras, Wolfs, Hippos, and Rhinos can undermine the efficacy of these meetings, leading to suboptimal outcomes. However, by adopting counter measurements, organizations can navigate these challenges successfully. That raises the question, how to tame them best.

Facts & figures are king to tame zebras 

The best way to encounter zebras is by encouraging a data-driven approach, where opinions are backed by solid evidence. It is recommended to gently challenge Zebras to present substantiated facts supporting their claims. Or you can provide alternative viewpoints supported by data, showcasing the importance of a balanced discussion to tame Zebras. And it is helpful to lead by example by presenting your own arguments with well-researched facts and figures.

Allocate time, delegate responsibility, align with strategy and balance the discussion when dealing with wolfs

To tame wolfs it is recommended to allocate specific time slots for addressing urgent matters in order to maintain a balance between short-term and long-term discussions. And you can assign someone to handle immediate issues outside the meeting and provide a summary during discussions. A further measurement to tame wolfs is to emphasize how addressing urgent matters aligns with the organization's overarching strategy. It is also recommended to strive for equilibrium between addressing immediate concerns and discussing long-term objectives.

Foster an inclusive culture, emphasize data, ask for equal input and challenge hippos respectfully

It is important when dealing with hippos to foster an inclusive culture where all participants feel valued and encouraged to share their insights. You also should encourage data-backed opinions, demonstrating the importance of evidence in decision-making. A proven method to tame hippos is to create opportunities for input from all team members to ensure a comprehensive view of the situation.  It is also helpful to politely challenge hippos' opinions and present alternative viewpoints supported by data.

Set clear expectations, create opportunities for input, assign follow-up tasks and establish feedback loops to awakening rhinos participation

A measurement to encourage rhinos participation is to communicate the purpose and role of all participants to set clear expectations. You may designate specific moments for Rhinos to share insights or ask questions during discussions. It is recommended to assign follow-up tasks related to meeting discussions to encourage engagement beyond the meeting. You may also gather feedback from Rhinos to make improvements and enhance their participation.

A structured agenda, a facilitator role, data-driven culture, diverse participation and an inclusive environment are overarching strategies to make best out of your strategy meetings

To effectively manage all types of participants consider implementing the following overarching strategies:

1.     Have a well-structured meeting agenda that includes dedicated time for urgent matters, strategic discussions, and input from all team members.

2.     Assign a skilled facilitator to guide discussions, manage contributions, and ensure everyone's voice is heard.

3.     Cultivate a culture of evidence-based decision-making where opinions are supported by data and facts.

4.     Invite a diverse group of participants to ensure a variety of perspectives and insights are considered.

5.     Create a safe and inclusive environment where all participants feel comfortable sharing their thoughts, regardless of their rank or role.

By proactively addressing the challenges posed by Zebras, Wolfs, Hippos, and Rhinos, you can promote effective, balanced, and productive strategy meetings that lead to well-informed decisions and successful outcomes.