IT’S TIME TO BRING TRANSFORMATION TO LIFE

Nearly 80 percent of bank leaders we recently surveyed say their organization’s very existence could be threatened if they do not update technology to be more flexible and capable of supporting rapid innovation.1

“How do we keep up during times of change?” is a question we are hearing more and more from these leaders. The question they should be also be asking is, “How can we create a high-performing organization that thrives during times of change?” This volume of change, unparalleled in a generation, is being thrown at front line lenders, underwriters, and their support teams. Recognizing the challenge this represents and embracing it by putting people at the center of the transformation is key to improved performance.

Most commercial banks are making their first transformational investment in a decade or more. That lack of investment has enabled a culture of workarounds, manual processes, shadow files, “figure it out myself” mentalities, and deep expertise that often resides in a just a handful of key employees. The prospect of change, even positive change, can feel threatening to many who see their hard-earned status being jeopardized or those who wonder if they will be left behind as the business moves forward. Even positive change can be disruptive, and if you combine that with an environment of low trust based on empty promises of change and failed prior attempts, leaders are left asking how they can deliver transformation and innovation in a way that brings their employees on the journey with them.

Highly-engaged workforces have 21 percent higher profitability compared to those with poor engagement.2

2 The answer to that question becomes even more important when you understand that companies with highly-engaged workforces have 21 percent higher profitability compared to those with poor engagement, according to Gallup.3 Accenture’s answer to employee-centric transformation for commercial lending is doing just that. Our commercial lending change adoption model is robust, built upon our deep lending expertise and experience, but at its core, it is modeled around the knowledge that there is a science to managing change and investing in your employee s, and that investing wisely will lead to increased adoption and greater value for the bank.

Only 40 percent of transformations realize all or a majority of their business case objectives.4

Primary reasons 60% of extremely for digital successful change revolution failure 84% of companies programs focused are fail at digital some initiatives transformations6 entirely or mostly on (59%) and 7

(56%)5

OPENING DOORS TO CHANGE IN COMMERCIAL LENDING

• •

• •

(such as nCino) •

(such as Loan IQ) • Pricing tools •

new generation of workers

3 THREE ELEMENTS TO CREATING A TRUE CULTURE OF CHANGE

Commercial credit transformation shouldn’t be an episodic event. Instead it should kick start a process of continuous improvement that encompasses systems, processes, and policies. A sustainable culture of change and improvement requires a culture that enables and empowers people across the bank to “own” the change at a personal level. Based on our experience, this culture of change is built—and is best managed—through three people-related elements, as shown in Figure 1: 01 DEFINE AND ARTICULATE a clear and motivating change journey. 02 CLEARLY ALIGN the organization, behaviors, and ways of working to that ultimate destination. ACCELERATE THE TEAM with tools, processes, and learning opportunities that encourage 03 engagement and provide the best possible employee experience.

Figure 1. The three people-related elements for driving transformational change all start with leadership

LEARNING & COACHING FUTURE + JOURNEY

SOCIAL DEFINE INFLUENCERS YOUR PATH ACCELERATE YOUR TEAM

LEADERSHIP DIGITAL ENABLERS

TALENT + WORKFORCE AGILE ORGANIZATION

ALIGN VISION CULTURE + YOUR ORG POSITIONING BEHAVIOR

NAVIGATION

STRATEGY | JOURNEY STAGE AND LEVEL OF ENAGAGEMENT ADOPTION | LOW TOUGH HIGH TOUCH

Source: Accenture 4 Successful execution across these three elements relies on clear commitment, direction and accountability from all leaders. According to our data analysis of 250 change initiatives at 150 global corporations8, the highest-performing change programs have strong, consistent capabilities in change leadership across all levels of the organization. Each level plays its required role. While an executive committee is vital to setting a clear vision and direction for the program, business unit leaders, in particular, play the most significant role in implementing change. This is where many banks tend to fall short, either by not understanding this need, underinvesting in it, or not enabling these leaders to drive the message and the actual change. Business unit leaders provide relevancy and weight to program messaging, deliver business benefits, and ensure high levels of sustained business performance. This is especially important with distributed employees, such as sales, so engaging regional leadership and team leads early is vital to the program’s success.

DEFINE THE PATH TO 01OPTIMAL OUTCOMES

This execution element aims to point the transformational compass toward a motivating destination. Employees need to clearly see the vision for the organization’s future and understand the “why” of the change to help them buy into and be a part of the journey. Defining the path of change to arrive at the vision involves:

Value realization. Quite simply “what’s measured is managed.” Thus, identifying the key user behaviors and cultural changes required of employees early enables the project team to manage to those outcomes and allows for a targeted and tailored change experience. An example of these cultural changes might include the fact that modern Loan Origination Systems (LOS) enable increased collaboration between sales and underwriting, but often this is a big cultural change from lenders’ current ways of working.

5 Employee experience.

Change only happens when employees truly embrace it and own it. That is why human-centric design and a change model that incorporates feedback across all levels of the organization is imperative. This change model includes having change champions who provide a two-way bridge between program leads and the workforce. They represent a 360° feedback loop in which both program messages and employee input can be exchanged. This type of two-way communication builds trust in the program, helping it to be successful where similar past initiatives have failed. Leadership can advocate for the transformation by empowering champions—through workload balance, pipeline management, sales target updates, performance alignment, rewards, and other incentives. For change to be effective leaders must be able to “put their best foot forward” in the role and that means it can’t be just an off the side of the desk role.

Personas. Developed early in the project through interviews and focus groups, personas allow the project to clearly design around the employee experience. This also allows the transformation change team to communicate in ways that feel personal to employees. For example, the needs of sales, underwriting, credit officers, and operations can be very different. Credit officers might not engage in LOS systems today and can require more of a “white glove” approach when it comes to communications and training.

6 loan origination systems

WHAT’S IN IT FOR ME?

Better and easier reporting.

WHAT AM I AFRAID OF?

WHAT MAKES ME UNIQUE?

approvals in a system.

to complete, so my training should be concise and targeted.

and I might need more support when they do.

7 Transparency.

Often, lenders avoid answering the most challenging questions about a transformation, preferring to focus on positive messages and forgetting that employees are likely to be skeptical of change, fearful of being left without the right skills or wondering if they will have a job at the end of the transformation. Banks that message both the good news and the more challenging aspects of change with candor and honesty, and also provide ample time for employees to prepare for that change, build trust with employees who stay while demonstrating an empathetic and human- centered approach to any downsizing required.

Driver Degree of Impact

Vision and Direction

Business Leadership

Passion and Drive

Low Fear and Frustration

8 ALIGN THE ORGANIZATION 02FOR THE FUTURE

This execution element focuses on really understanding what employees are thinking in order to align their experience with the desired change outcome. This is accomplished by focusing on culture and behavior, data-driven navigation, and vision positioning.

To remove barriers to transformation and create meaningful and lasting change, banks must draw on both the rational and emotional influencers of their workforces’ behavior. This starts by breaking down desired culture changes into small, actionable behaviors that are then reinforced and modeled by management. Some of these behaviors include collaboration, data stewardship, and transparency. Data stewardship is especially important in modern LOS systems, where more of the deal team collaborates within one system using one source of the truth. Any behaviors that depended on information asymmetry won’t survive the transition and need to be addressed upfront.

Data-driven navigation. To reach their transformational goals, lenders need to know where they are, where they are going, and how to achieve their desired outcomes. Today’s sophisticated quantitative approaches are helping to demystify the people side of organizational change. Data-centric tools, such as organizational analytics (see the sidebar “Transformation GPS”), interviews, focus groups, and feedback channels, can help. They give banks additional insight on the workforce to help them better understand, assess and address the people issues that can derail programs. Gone is the one-size-fits-all approach to change. Now we can see by team, region, role, business unit and other relevant segments where people are succeeding, where they need support and whatchange tactics will be most effective.

9 It’s been a long time since many commercial banks have executed high-impact transformational change. It makes them ripe to take advantage of Transformation GPS, a tool that helps change teams derive precisely targeted, actionable insights from data and sophisticated mathematical models. By benchmarking and comparing results against similar implementations, it is also a way for banks to gauge their readiness for change and identify gaps early, ultimately lowering risk and accelerating results.

Our multi-dimensional Transformation Performance Map, based on 33 billion calculations, helps visualize exactly where all critical stakeholder groups are (as shown below) and what issues and dynamics need to be addressed so that change leaders can make targeted, surgical interventions.

Pushing the Limits

Cruising Achieved with Loss of Heart Business On the as Usual Run Good but Not Yet Great Bumpy Yes, but Building Ride Momentum Sleepy in In the Battling Success Dark It Out Struggling under Presure Just Get Flatlining On with It Burning Platform Rocky Ground

Case for Washed Action Up

Downward High Performance Spiral Peak Performance Improved Business improvement and high Performance and above transformation driver the norm driver strength strength

Unsustainable Improved Business Declining Business Performance but below Performance and well the norm driver strength below the norm driver strength

Source: Accenture

10 Vision positioning. Like any good relationship, empowering employees for transformational change requires the highest levels of buy-in, trust, and transparency. This is typically best achieved through effective positioning of the vision, built on “what’s in it for me” user experience stories, next-generation communications and creative storytelling.

The shift to a next-stage operating model and new technology is often one of the biggest investments a bank can make, so it is key to elevate the excitement and communicate in a way that builds positive momentum rather than stoking fear. New digital communications tools— from interactive polling to infographics— give banks quick, exciting and more affordable ways to improve their change communications and engage employees.

11 ACCELERATE YOUR 03TEAM’S ABILITIES

This execution element propels commercial lending transformation by creating an empowered workforce and making intentional investments in employee skills development. Adapting to new operating models and technology gives commercial lenders sufficient reasons to update their methods of employee communications, learning, engagement, and solution adoption. It also means that commercial banks can adopt continuous learning as part of its change program, with constant updates and enhancements to keep workforce skills current and fresh. Many new digital tools are available to help lenders do just that. They include learning boards, 30-day challenges and chatter-based quick tips that work to maximize learning and post deployment adoption while minimizing work disruptions, like excessive time out of office.

12 of workplace learning should now be through on-the-job tools, like chatter groups, 70% blogs, job aids, job pairing and 30-day challenges, that support employees in real time and enables them to support each other. Providing resources like these minimizes the time out of seats for formal training so that employees can focus on driving business success.

should be via informal learning, using mentorship and coaching that draws on 20% autonomy, mastery, and purpose to more naturally motivate the workforce. Learning directly from other people has been shown to improve work performance by 42 percent.9 This gives the existing employees with deep expertise a valuable role in transitioning to the future of the organization.

should be formal learning via personalized coursework conducted virtually or in-person. 10% Adding accreditation and course completion tracking further confirms the value to the bank of time spent learning and preparing for change. When it comes to new LOS technology, this is key for employees within underwriting and operations, as hands- on training yields thea best doption rates, based on our experience working with six national and three super regional banks on lending transformation.

Figure 2. The learner experience is shifting from “go away and learn” to “learn on the go”.

IN NG FO NI RM AR A LE L L E EA AC Job R PL Shadowing KM N K IN R & Pairing System Action Learning G O Simulations & Experts Network W Serious Games Forums/Communities

Coaching & Mentoring F Blogs Job Aids Video O Podcasting R Performance M Support A Ask the L Community P R 20% O Wikis eLearning & G V-classroom ILT R A

M

Apps S 70% THE LEARNER EXPERIENCE 10% Accreditation The new workforce expects digitally-enabled and hyper-personalized talent development experiences WHERE IS Source: Accenture YOUR 70?

13 BANKS, TURN THE KEY ON LENDING CHANGE

14 REFERENCES

1 2018 North America Banking Operations Survey (2018, March). Accenture.

2 Employee Engagement on the Rise in the U.S. (2018, August 26). Gallup.

3 Ibid.

4 Accenture Global Survey, “Unlocking Business Value: Ensuring benefits realization in enterprise transformation programs,” 2013.

5 Cabrey, T.S., and Haughey, A (2014). PMI’s Pulse of the Profession In-Depth Report: Enabling Organizational Change Through Strategic Initiatives. PMI.

6 Rogers, Bruce (2016). Why 84% Of Companies Fail At Digital Transformation. Forbes.

7 Keller, S., Meany, M., and Pung, C (2010). What successful transformations share: McKinsey Global Survey results. McKinsey.

8 Memo to the C-suite: You are not the main driver of change (2016). Accenture.

9 Building a Coaching Culture (2014). ICF.

15 CONTACTS ABOUT ACCENTURE JARED RORRER Accenture is a leading global professional services company, providing a broad Managing Director range of services and solutions in Commercial Credit Accenture strategy, consulting, digital, technology [email protected] and operations. Combining unmatched experience and specialized skills across TYLER DEGENHARDT more than 40 industries and all business Managing Director functions — underpinned by the world’s Talent & Organization, largest delivery network — Accenture Financial Services Accenture works at the intersection of business [email protected] and technology to help clients improve their performance and create sustaina ble value for their stakeholders. With 477,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

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