Case Study: Enabling a New Approach to Strategic Change in Community and Regional Banks

Banks often make changes to their business or technology to achieve singular product, business, or platform goals. This is completely understandable; in most cases, it is the only way to exploit business opportunities that will not wait for the complex and time-consuming process.  There is rarely time to take a broader view across the institution and develop a longer-term strategy to enable future efficiencies or advancements that move the whole enterprise forward.  One consequence of this approach, though, is a repeating cycle of changes that increase the bank’s complexity and, ultimately, the cost of operating and supporting it.

Invest now, save many times over later.
As they review the way they do business in a post-financial-crisis world, some banks are looking to break this cycle and think ahead about how they can enable strategic change—while still maintaining the ability to respond to business opportunities in a timely manner. One effective technique for doing this is to use enterprise architecture techniques.

“Enterprise Architecture” can mean different things to different people. In general though, it has two dimensions: Understanding and modeling the enterprise view of how the business, its technology and its data work together to support business outcomes; and aligning and guiding future changes related to corporate, business, and technology strategy.

As banking becomes ever-more technology centric, Enterprise Architecture can play a pivotal role in enabling strategic change. This is true across the size spectrum—from smaller banks that may be focused on managing external technology providers to larger banks that have amassed complex and sizable technology operations.
West Monroe Partners recently worked with a $13+ billion commercial and retail bank to establish enterprise architecture practices that will support the bank’s strategic planning and help deliver key business changes going forward.

Let’s take a closer look at the need, the approach, and how this exercise will benefit the bank going forward.

The bank’s key challenges.
This bank faced a host of common challenges that limited its ability to articulate and communicate a shared strategic direction and prioritize initiatives across the enterprise. Issues included:

  • Limited overall visibility of current capabilities
  • Difficulty realizing and optimizing return on investment from existing assets
  • Disparate platforms
  • Limited resources for developing and maintaining those platforms
  • No holistic representation of the complexity of the platforms supporting the bank’s business

The bank wanted to take control of its current technology landscape and develop capabilities that will enable it to plan and prepare more effectively for change. West Monroe Partners assisted, providing experience and an approach using “right-sized” enterprise architecture techniques to structure and reference organizational knowledge in a consumable format—up, down, and across the organization. This approach creates a shared baseline of knowledge—one that enables effective collaboration and responsiveness, while reducing reliance on knowledge that resides in a limited number of minds within the institution.

Project structure.
This project included four key elements.

1) Gaining a comprehensive view of the technology that supports the bank today.
Understanding where the organization is today is critical both for supporting today’s operations and enabling strategic change. Stated another way, you have to know where you are in order to get where you want to be.

This phase of the project discovered and mapped how existing systems support the bank’s key business functions and roles.  It also determined how systems interfaced with each other to fulfill business needs. The project team captured information about nearly 300 applications including key information about the application’s purpose, nature of usage, as well as over 300 key interfaces.  This information was represented in a model and used as a source for visual diagrams or maps that represented each line of business and the enterprise as a whole. These diagrams helped the bank understand and articulate current complexity and provided a vital baseline for the bank’s planned changes.

2) Articulating strategy.
“Strategy articulation maps” depict the hierarchy of corporate strategies, business goals, business strategies, detailed strategies, and actions. The West Monroe team facilitated the capture and consistent articulation of strategies from corporate, lines of business, products, and technology that provide a view of how the organization is pushing forward on multiple independent and dependent fronts.

An additional benefit of this phase of the project was providing a basis for collaboration between business and technology teams with respect to both direction and required capabilities. The activities brought together expertise from across the bank to plan strategic change, identify more effective ways to move forward, and avoid potential issues such as costly overruns and investment in sub-optimal or failed changes.

3) Agreeing on a timeline for executing the organization’s strategic plans.
Executing the strategy depends on many factors, not least of which are the amount of time and the funding available to support the change. To support the bank, our team developed “strategy execution timelines” that depicted the various planned projects necessary to deliver the strategy. These timelines provided consistent and open representation of the time required to deliver against a strategy. These timelines enable the bank to review and modify plans and, as necessary, reprioritize efforts or adjust investment along the way to influence the timelines for executing the strategy. This also provides a shared baseline plan that can be used to understand and manage the real-time impact of new high-priority items which are unavoidable.

4) Creating a picture of the future.
With an understanding of its current state, planned and articulated changes, and a timeline for implementing them, the bank was able to develop a clear picture of its future—at one and three years out from the time of the project. This picture of the future was helpful for several reasons. It showed the impact of defined changes and provided a basis for planning additional changes. It also allowed the institution to think more than one step ahead and to analyze and perhaps influence impacts; for example, determining how evolving vendor capabilities may support the bank into the future.

Enabling effective collaboration, driving strategic change.
In around three months, West Monroe helped the bank by gathering insight, analyzing, and articulating its current state, strategies, planned initiatives, and resulting future state. The project produced roadmaps and a supporting enterprise architecture model that covers more than half the bank’s business and provides a basis for the bank to transform the way it leverages existing capabilities and approaches strategic change.

For more information, please contact Robin Hinds.

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