Keeping Pace with Performance: Technology Transformation Through Small Bets

This is the final post in our three-part series on the cost-to-income (CTI) challenge facing Mutual Banks. In previous posts, we explored the strategic urgency of CTI and the revenue challenge. Now, we turn to the cost side – specifically, how technology transformation can serve as a lever for greater efficiency, enhanced agility, and long-term sustainability.

Mutuals Do Well with Costs, but a Significant CTI Issue Remains

Generally, Mutuals are prudent in managing people-related expenses, often prioritising Member-facing staff over large Head Office costs. However, it is often the technology and related large transformation projects which can materially inflate the cost base; particularly when the asset base isn’t at a scale to ‘absorb’ these costs.

The Temptation of Big Bang

In the face of rising costs and digital expectations, many Mutual Banks feel the pressure to “catch up” fast. The instinct is often to pursue large-scale technology overhauls – such as core banking replacements, full-stack digital platforms, or enterprise-wide automation.

But here’s the reality: big bang technology transformations are high-risk, high-cost, and often misaligned with the scale and agility of Mutual Banks.

The Case for Small Bets

Instead of betting the farm, Mutual Banks should consider a portfolio of small, strategic bets – targeted investments that deliver incremental value, reduce costs, and build capability over time. While this approach is particularly relevant to technology and transformation, it also applies more broadly to how Mutual Banks manage their overall cost profile. This approach is better aligned with the typical risk appetite of Mutual Banks, while introducing a more experimental flavour (over the pure ‘gulp’ of big bang transformation).

This approach offers several advantages:

1. Lower Risk, Faster Feedback

• Small bets allow for experimentation and learning. Banks can test new tools, channels, or processes without committing to full-scale change.
• This reduces the risk of sunk costs and enables course correction.

2. Better Alignment with Member Needs

• Mutuals can use Member feedback and data to guide tech investments – focusing on what actually improves experience and engagement.
• Examples include chatbots for service, digital onboarding, and simple workflow automation.

3. Scalable Efficiency

• Small bets can target specific cost drivers – such as manual processes, legacy systems, or compliance overhead.
• Over time, these improvements compound, driving down operating costs and improving the CTI ratio.

What Does a Small Bet Look Like?

• Automating a single high-volume back-office process
• Piloting a digital lending tool for one product segment
• Introducing a Member self-service portal for common requests
• Using AI to triage inbound service queries

These initiatives may not grab headlines – but they are practical, measurable, and scalable. Importantly, they can drive real change for both Members and the overarching CTI challenge.

How SPP Can Help

• Identify high-impact areas for tech investment
• Prioritise initiatives based on ROI and Member value
• Design agile implementation roadmaps
• Build internal capability for continuous improvement

Conclusion: A Smarter Path to Transformation

Technology transformation doesn’t need to be revolutionary to be effective. For Mutual Banks, the smarter path is evolutionary – guided by strategy, grounded in Member needs, and executed through small, deliberate steps.

The CTI challenge is real. But with the right approach, it’s solvable. Let’s make technology work for Mutuals – not overwhelm them.