A recently released McKinsey article highlights a sobering truth: despite massive technology spend—$650 billion globally in 2023, growing at 9% annually—U.S. banks are struggling to see tangible results. Productivity at U.S. banks, for instance, has declined by 0.3% per year since 2010, underscoring the challenges in realizing scale economies.
This isn’t uncommon across industries, but it can be addressed. Drawing on my own experiences with successes and pitfalls in digital transformation, I’ve identified three critical focus areas for organizations aiming to unlock the full value of their technology investments. These align closely with McKinsey’s recommendations:
1. Celebrate Benefits Realized, Not Just Technology Implementations
Too often, success is celebrated at the point of technology deployment, but the true goal lies in the outcomes it enables. For example:
- If the objective is to improve Net Promoter Score (NPS) by 10 basis points or reduce costs by $10M, success should be celebrated when these outcomes are achieved—not merely when the technology goes live.
The journey from implementation to benefits realization is often long and requires ongoing focus. Keep your eye on the business outcomes, not just the tech milestones.
2. Less is More: Focus on Quality Over Quantity
Technology investments can accumulate rapidly, with depreciation hitting the books before benefits are realized. A “more is better” mindset leads to resource dilution and reduced impact.
Instead, prioritize a smaller number of high-impact initiatives. Focus on the quality and alignment of these investments with strategic business goals. This disciplined approach ensures that the technology spend yields tangible and measurable results.
3. Strengthen Governance with Joint Business and Technology Ownership
Governance frameworks are critical to bridging the gap between technical capabilities and business outcomes. These investments shouldn’t be reviewed solely by technical committees. Instead:
- Ensure joint ownership between business and technology stakeholders.
- Align interests around shared outcomes, with clear accountability for timelines and results.
Timelines and outcomes should be actively measured, and governance should focus on enabling, not hindering, success. This collaboration fosters a culture where both sides are invested in achieving the same business goals.
Unlocking the full value of technology investments requires a focused and outcome-driven approach. By celebrating realized benefits, prioritizing quality over quantity, and fostering strong governance frameworks, organizations can close the gap between spending and results.
The McKinsey article offers additional insights, including the importance of concentrating investments in high-value domains and adopting outcome-based execution approaches. These principles align with my own experience and reinforce the need for strategic discipline in digital transformation.
I’d love to hear your thoughts. How is your organization ensuring success in its technology investments? Reach out for support with your digital transformation journey.
For more, check out the full McKinsey article here: Unlocking Value from Technology in Banking.
