What are the “Do’s and Don’ts” from 11 yearlong core Banking Transformation at $87.6 billion asset Zions Bank?

Core Banking Transformation is a huge undertaking both in terms of investment and multi-year commitments. C suite executive potentially can lead only one such transformation, since it is done once in 2 to 3 decades. Hence it is apt to be reminded of quote from President Abraham Lincoln “Give me?six hours to chop down a tree?and I will spend the?first four?sharpening the axe".

Post 2 years of planning since 2011, Zions took 11 years from 2013 to 2024 to complete the core migration launch in 3 phases - consumer loan in 2017; construction and commercial loan in 2019; and the deposit platform in July 2024. ?Zions had grown through acquisitions of seven regional brands and used multiple platforms to service loans and deposits.

As part of this initiative, it standardized business processes such as branch, deposit and loan operations, rationalized deposit products from 500 to almost 100, enabled real time access to data which makes it easier for customer servicing for front line employees and enable Fraud reduction. ?All this has set the ground for further innovation through treasury products and leveraging the power of AI.

Since Zions was one of the early adopters, it has its own set of learnings which led to overrun both on budget and timelines. Here’s the key ones with additional attribution to AI first approach and modern-day tech enhancements:

1.?????? Voice of customer led Business Features envisioning and prioritization – This started as tech led and engaged more business leaders 4 years later in 2017. Recommended approach is to engage all the stakeholders upfront – Branch Operations, Customer Care professionals, Risk, Security, Technology and potentially perform design thinking workshop or focused group sessions to capture the current customer centric pain points taking a customer journey centric approach for Deposit, Loan etc., share the industry innovations with respect to the change persona expectations ( Gen Z, Gen Alpha – Mobile first generation) and align on the broad features for grooming. This typically converts into Business blueprint and Business Architecture.

2.?????? Key guiding principles and strategic decisions upfront – Banks need to be designed to grow through acquisitions and standard process needs to establish so that it can adhere to subsequent impact. Several key considerations need to be established upfront – Deposit product rationalization; Real-time access to data through APIs from all core systems; Hollow the core to keep only ledger processing information for deposits and loans; integration with relationship based pricing, payments, any channels ( Branch, ITM, ATM, Web, Mobile, Call Center, BaaS etc.); Headless architecture; Ability to support future growth – Currency :Fiat Vs Non-Fiat, Asset Tokenization etc.

3.?????? No Regret technology platforms & Capabilities – Zions moved to agile based approach in 2019 and invested in automated testing in 2017. There are several no-regrets that enterprise must invest which are pre-requisites for enterprise transformation journey – Metrics driven agile process, DevSecOps platform for any code release, API Platform, Real-time data platform, Full stack Testing Automation with AI driven Test case and synthetic test data creation, PaaS, Cloud adoption, End-2-end observability and telemetry with customer journey centric views. All these are critical for enterprise resiliency and adherence to DORA act.

4.?????? Overall Operating model including Governance and Decisioning framework – Agile, Sequence of activities. For Zions for deposits, 30 teams worked in parallel, any delay from one team created dominos effect. For Core Banking or similar large initiative, it is important to not get lost in Agile based principles and keep practical approach. Maintain an overall program roadmap with sequencing of broad features. Any impact area which can impact beyond 3 months, should be dealt ahead of time. Grooming is done ahead of time and once aligned with all the teams, program team needs to ensure adherence and use steering co for blockers if this is across horizontal teams. ?Accountability lies with the program team and they should make decisions within the guardrails.

5.?????? Fast lane approach for new tech solutions – Tech changes faster than we imagine. For larger programs which runs around 18 months or more, some of the tech will change and new advancements would happen. It is important to have a lab-based approach to develop frameworks, solutions in a platform centric approach to accelerate the journey. For Zions, API came much later, PPP hit in 2020 with Covid. These are unknown and unavoidable situations but having a plan to absorb such situations really help long range programs. Today LLM is in vogue, but we are already seeing several patterns of Graph LLM, Agentic AI, LLM Mesh. This is natural as tech matures and we need to be along the journey otherwise we will be left far behind.