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8 Common Pitfalls of Digital Transformation

Written by Allan Rayson | December 6, 2024 at 2:00 PM

Hey y’all, Allan here (forgive the “y’all,” I’m in Austin).

To start, my perspective on digital transformation has been shaped by three key experiences in building fintechs and banks and navigating the digital transformations that came with them. While we’ll delve into these experiences separately, here’s a summary:

Experiences

First Experience

Building an early-stage fintech in 2015 that provided a digital payments journey for small businesses in the U.S. The business allowed small business owners to outsource accounts receivable management and collections to our team, with payments structured and processed through a proprietary payments platform.

Second Experience

Developing an end-to-end digital strategy for SBA loan origination at a major U.S. bank. This pre-COVID initiative aimed to create a fully digital SBA loan process, which was implemented within days of the PPP rollout in early 2020.

Third Experience

Designing a digital strategy for a community bank after acquiring a bank charter in 2019. This “blank slate” bank, apart from its core banking technology, required a strategy to optimize its primary revenue source, deposit gathering, and fee generation.

Through these experiences crafting digital strategies, we gained insights into both successful revenue-generating initiatives and missteps that fell short.

The 8 Pitfalls

Data Organization Issues

Disconnected data scattered across systems such as core banking, digital platforms, treasury, lending, and card transactions lacks proper centralization, hindering effective digital transformation.

Technology Underutilization

Failure to maximize existing technology investments leads to bloated tech stacks and redundant “point solutions.”

Poor Revenue Strategy

Missing opportunities to drive profit by focusing too heavily on operational issues rather than revenue-generating initiatives.

Contract Mismanagement

Vendor contracts often lack the flexibility to adapt to evolving digital needs.

Board Communication Gaps

Ineffective communication with the Board regarding technology initiatives and progress can stall support and decision-making.

Third-Party Risk Oversights

Insufficient understanding and management of business continuity risks from vendors and partners.

Organizational Design Flaws

Misaligned structures across data, technology, project management, compliance, data security, and marketing teams—compounded by weak change management practices—undermine efficiency and collaboration.

Late Planning

Delaying the creation of a digital strategy roadmap reduces the ability to identify and capture quick wins.

A recent study by Alkami highlights a strong correlation between a bank’s digital maturity and its profitability. Alkami’s collaboration with Jim Marous states, “financial institutions leading in digital maturity are growing at nearly 10 times the rate of their less advanced counterparts.”

About Finov8r

Finov8r is a leading embedded advisory consultancy that supports banks, fintechs, and corporations. Bridging finance and technology, Finov8r provides tailored solutions that foster profitable growth, simplify technology complexities, and deliver 5x ROI through fintech innovations. With hands-on advisory, Finov8r works within teams to achieve long-term results, unlock new revenue streams, and modernize operations. For more information, visit finov8r.com and follow on LinkedIn.

Get In Touch

  • Bank executive, fintech founder or business owner and want to get in touch regarding Finov8r advisory? Email me at allan@finov8r.com.

  • Media or speaking engagements please contact William Mills Agency in Atlanta.