Edition 4: The Modernisation Mandate: Ten Hard-Earned Lessons for Scaling Banks

1. Anchor to Business Outcomes, Not Technology Deliverables 

It’s easy to fall into the trap of equating transformation with system delivery. But “core replacement complete” is not a business outcome. Neither is “cloud migration achieved.” These are inputs, not results. 

True transformation is when the cost-income ratio drops, lending approval times shrink from weeks to hours, or regulators acknowledge stronger control. Anchoring to these outcomes ensures programmes create measurable value, not just technical milestones. 

Takeaway: Always start with the business problem you’re solving and for whom. If you can’t answer that in one sentence, the initiative isn’t ready. 

2.0 Sequence with Brutal Prioritisation 

Most failed programmes collapse under their own weight. Leaders try to modernise everything at once  the “Christmas Tree” approach — and end up stretched, late, and over budget. 

The discipline is to pick a handful of initiatives that matter most. In one programme, a bloated three-year roadmap with 27 major initiatives was reset into a nine-month sprint of just three. The result? Tangible savings, credibility with investors, and momentum to fund the next phase. 

70% of transformations fail because of overreach (Quinnox, 2024). The antidote is ruthless prioritisation. 

Takeaway: Focus creates momentum; scatter destroys it. 

3. Hollow the Core, Don’t Big-Bang Replace 

Big-bang core replacements are alluring but dangerous. They promise a clean start, but in reality they are multi-year gambles that drain energy and risk destabilising the bank. 

A safer strategy is to “hollow the core”: build new digital layers around the legacy platform, expose services via APIs, and migrate products incrementally. This delivers new propositions in months, not years, and avoids the cliff-edge risks of a single go-live. 

Takeaway: Think bypass surgery, not heart transplant. 

4. Treat Data Migration as a Business-Critical Factory 

Ask any transformation leader their biggest hidden risk, and most will point to data migration. It is consistently underestimated and is one of the top three causes of programme overruns (FSI Transformation Report, 2024). 

This is not an IT subtask. It is a business-critical production line requiring dedicated factories, repeated dress rehearsals, and business experts to sign off on integrity. A single missed reconciliation rule or date logic error can derail reputations and trigger regulatory escalation. 

Takeaway: Treat migration as core, not peripheral. Shortcuts here rarely end well. 

5. Instil Rigour in Business Testing 

Technical testing proves a system compiles. But only business testing proves it can actually run the bank. 

Too often, testing is left to IT. The result: solutions that are technically sound but flawed in business logic. Real-world scenarios — loan rejections, reconciliation breaks, customer edge cases — only surface when business leaders own testing. If the CRO, COO, and CFO wouldn’t sign off that they could run the bank on day one, it isn’t ready. 

Takeaway: Testing is leadership work, not IT admin. 

6. Design the Operating Model for ROI from Day One 

The fastest way to waste millions is to replicate old processes on new platforms. Lifting and shifting inefficiencies produces shiny tech with legacy problems intact. 

Real ROI comes when the operating model is reshaped in tandem with the technology. Teams restructured, data ownership clarified, decision rights simplified. In one Nordic bank, we redesigned the IT operating model before a core replacement delivered €78M in annual savings and regulatory alignment. 

Takeaway: Technology enables, but operating model change unlocks value. 

7. Pair Strategic Partners with Empowered Internal Authority 

Vendors and integrators can deliver speed and scale, but they cannot decide what your bank should become. Without empowered internal leadership, vendors drift toward “vanilla” solutions. 

Banks that succeed establish an internal Design Authority — a senior team with binding decision rights across business, tech, and risk. They align vendors with strategy, prevent scope creep, and ensure the design is future-proof. 

Takeaway: You can outsource execution, but never accountability. 

8. Make Independent Assurance Non-Negotiable 

Programme teams are wired for optimism. Green status reports often hide amber realities. 

Independent assurance provides the radar to spot issues before they become disasters. Weak QA can add 30% or more to programme costs through rework (PwC, 2024). Independent reviewers, reporting outside the programme structure, protect investment and reputation. 

Takeaway: Independence isn’t bureaucracy — it’s insurance. 

9. Structure Commercials to Drive Behaviour, Not Just Activity 

Contracts shape behaviour more than any committee. Poorly structured commercials reward the wrong things: time-and-materials encourages drag; fixed-price encourages corner-cutting. 

Smarter leaders design outcome-based contracts — milestone payments tied to value delivery, gain-share on efficiency savings, clear exit routes. In one case, restructuring commercials helped a UK challenger bank unlocked £30m in savings and vendor innovation. 

Takeaway: Pay for value, not effort. 

10. Plan for Overruns; Protect the Benefits 

No major programme runs perfectly. Leaders who budget for perfection are those most exposed when surprises hit. 

The best programmes carry 15–20% contingency and pre-define which benefits are non-negotiable. When issues arise, non-core features can be cut to protect ROI-critical outcomes. 

Takeaway: Protect the core ROI, flex everything else around it.