How do you transform a bank? To transform is to change the form. How do you change the form of a financial institution from manual to digital? Today, read about how we supported a digital transformation project in a bank referred to as XYZ Bank for confidentiality purposes.

Figure 1: Fintech disrupting the financial sector

XYZ Bank is one of Uganda’s financial institutions. Over the years it found itself facing a major problem, the old ways of doing things weren’t cutting it anymore. Finitechs like Pegasus, are fast having the lunch of most banks (Figure 1). Banking services have been unbundled by fintech and banks are remaining with the skin, especially those that do not wake up.

At XYZ bank, with most of the processes done manually - account opening, service requests, loan approvals, continuous customer service, even fraud detection - it felt like the bank was dragging a heavy weight behind it akin to pushing a loaded wheelbarrow uphill with increasing intensity of steepness. Summit Consulting Ltd was called to facilitate the bank’s digital agenda. Please note that all names in this case are fictitious and any similarity of any bank official is by coincidence. However, as part of our standard pre-assignment engagement, we requested a copy of the bank’s strategy. That is when we discovered that the bank’s strategy was inadequate to support the digital ambition. The bank’s business model was more of a “manual” one and not ready for a digital transformation project. Digital transformation is a process, and requires a phased approach that is adequately planned for.  To get the bank moving, we recommended to start by reviewing the bank’s strategy to refresh it. We noted that customers were growing frustrated, staff were overwhelmed, and the competition was speeding ahead.

John Kato Head of Operations, remembers the pressure well. “It was a struggle to keep up,” he recalls. “A simple loan approval could take days. Prospective customers would first come to the bank, fill out so many forms, and after spending over two weeks waiting, they get informed that they do not qualify for the loan amount applied for! Meanwhile, existing customers were queuing up, frustrated by the slow processes, and some were even leaving for banks that promised faster digital services.”

At its core, XYZ Bank had a business model that simply wasn’t scalable. One of the big challenges of a manual bank is its inability to grow its customer base without a significant increase in new investment. When it comes to bank profitability, being able to handle large volumes of transactions at smaller margins is key to winning. The bank’s Chief Strategy Officer, Sarah Akello, puts it bluntly: “We were stuck in a business model that worked for yesterday, but not for today. Our growth was limited. Opening new branches was costly, and the more customers we got, the harder it became to manage them. The banking hall became some sort of sleeping hall. People would come, sit and sleep. The roles of the bank security officers turned to tapping on people to wake them up so that they don’t snore. It was that bad. We needed a solution, fast.”

The customer service team was hit hard by these issues. Jane Nakitende, who heads the department, still hears the complaints. “Customers expect their banking to be as fast as sending a WhatsApp message. But here we were, making them wait days to get something as simple as an account update. It wasn’t working, and they weren’t happy.”

To make matters worse, the bank’s fraud detection system was woefully outdated. Robert Muwanga, Chief Risk Officer, admits that their response to fraud felt like running after a thief long after they’d escaped. “We were often reacting to fraud after the damage was already done,” he says. “We didn’t have real-time systems to monitor fraud in place, and that left us vulnerable.” Something had to change. The bank’s board knew it. They could either keep plodding along or embrace technology to transform their business from the ground up. The board members had heard about digital transformation and AI - artificial intelligence - being used by banks worldwide to streamline operations, reduce errors, and serve customers better. But there were doubts. Would digitalization and AI work for them? Was it safe? How would their staff react?

David Lule, the Chairman of the Board, knew it was time to make a tough decision. “Think of digital and AI as an extra pair of hands that never get tired,” he told the board during one pivotal meeting. “We need something to help us handle routine tasks and free up our people for more valuable work. If we don’t act now, we’ll be left behind.”

The board moved forward with caution, but also with determination. They ordered a full review of how technology could automate processes supported with the new emerging technology like AI to transform the bank’s operations. They also wanted to be sure that any changes wouldn’t create new risks - especially when it came to data privacy and compliance with regulations.

Muwanga recalls the tension during the early stages. “Our top concern was making sure we implemented technology and AI securely. The last thing we needed was to solve one problem while creating another. So, we made sure we had the right risk management frameworks in place.”

Meanwhile, the staff had their worries. The idea of digital and AI made some people nervous. Would it replace jobs? Would they even be able to work with the new technology? Akello, who led the bank’s strategy, knew this concern all too well. “There was a lot of fear at first. People saw technology and AI as a threat, something that might make them redundant. We had to reassure them that digital transformation and AI wasn’t here to take away their jobs - it was here to make their work easier.”

We started with a thorough digital maturity assessment. We identified gaps and recommended an implementation plan, a 3-5 years phased approach to effect digital transformation. Based on the results of the reviews and our board engagements, effective change management was identified as key. One of the pillars of digital maturity assessment is people. We conducted a thorough assessment of people in terms of the human resource “skills of tomorrow” analysis, where we analyze the skills, experience and education of existing people vs the skills needed by the bank in the next 3 to five years; and examining the gaps, the people who can be trained, those who cannot upgrade and those with the required skills. Based on this, change management became critical.

The board insisted on training everyone at the start to ensure everyone was on the same page. Workshops were held to show the staff how digital transformation and AI could handle routine tasks like loan approvals, freeing up their time for more complex, rewarding work. Slowly, the staff came on board, and the excitement began to build.

And then, the transformation started. ICT was AI was integrated into the bank’s operations, and the results were immediate. Loans that used to take days to process were now approved in minutes. “I couldn’t believe how fast we could approve loans once digital tools and AI kicked in,” Kato says with a grin. “It’s a complete game-changer.”

Customers felt the difference, too. With online account origination and onboarding, online loan processing, and AI-powered chatbots handling basic customer service queries, there was no need to wait in long lines or be put on hold for hours. “It was like night and day,” Nakitende explains. “Customers could get answers immediately, even at night. No more waiting, no more frustration.”

Fraud detection, too, saw a massive improvement. AI began monitoring transactions in real time, flagging any suspicious activity before it could escalate. “The new system caught fraud we would have missed before,” Muwanga says, clearly impressed. “We’re now protecting both the bank and our customers so much better.”

Perhaps the biggest change came in the bank’s ability to grow without being bogged down by its old limitations. No longer needing to rely on more branches or more staff, XYZ Bank was able to scale up, serving a larger customer base while keeping costs under control. “We’ve unlocked new growth,” Akello says. “It feels like we’ve been set free from the old ways of doing things.”

But it wasn’t just the bank’s bottom line that improved. The board had played a crucial role in steering the bank through the transformation, ensuring that every decision was made thoughtfully and that no corners were cut. They guided the leadership, mitigated risks, and reassured the staff throughout the process.

In the end, XYZ Bank emerged not just as a bank that survived, but one that thrived in the digital age.

Here are questions for you,

How can ICT and AI help your bank address the challenges of manual processes and slow customer service?

What steps can the board take to ensure the smooth and secure integration of digital and AI into your business?

How can staff be supported and trained to see AI as a tool that helps, not threatens, their jobs?

What risks must be managed as your bank embraces digital and AI, and how can they be mitigated?

Digital transformation is not just about adopting technology - it's about reimagining your business to scale, serve, and thrive in the modern age. Embrace innovation, and turn challenges into opportunities for growth.

Mr.Strategy Tweet

The Board’s Impact

Throughout the transformation, the board was the guiding force behind every decision. They set a clear vision, ensuring that digital and AI adoption wasn’t just about technology but about improving services and growth. They didn’t rush - every step was carefully planned to manage risks, protect the bank, and support staff. And they kept a constant eye on AI’s performance, making adjustments as needed.

Because of their leadership, XYZ Bank is now poised for the future, able to scale its operations and deliver faster, more efficient services to its customers.

The board’s impact wasn’t just felt in the boardroom - it was felt across the entire organization.

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