Yet another bank-led fintech venture has shut down within a year of its launch. HSBC’s Zing, a payments app, failed to gain traction beyond its initial market and was discontinued. Despite ambitious plans to expand across two continents, Zing struggled to attract users, reaching only 8,736 monthly active users—well below its 12,000 target.
This is not an isolated case. Many traditional banks have tried to break into fintech, only to face similar challenges: slow adoption, lack of differentiation, and an inability to scale. Despite significant investments, these ventures failed to attract long-term users, largely because they didn’t offer anything fundamentally different from existing fintech challengers.
The issue isn’t the technology itself, however; it’s how banks approach digital transformation. Too often, legacy institutions treat fintech initiatives as technology upgrades rather than business transformation strategies, overlooking the structural, operational, and cultural shifts needed for success. To integrate digital solutions with traditional banking, institutions must rethink organizational design, decision-making, and customer engagement. Digital transformation isn’t just about launching a sleek new app—it requires breaking down silos, embedding a digital-first mindset, and aligning initiatives with a broader business strategy.
Technology Alone Won’t Solve the Problem
A common misconception in banking is that investing in cutting-edge technology alone is enough to drive competitiveness. Many banks acquire fintechs or develop new platforms under the assumption that the technology itself will generate innovation and new business. However, true transformation necessitates fundamental changes in organizational structures, decision-making processes, and corporate culture. A 2023 report by Bain & Company, United We Thrive: The Untapped Power of Bank-Fintech Partnerships, reinforces this idea, emphasizing that successful innovation in banking demands sustained work beyond technological adoption and into cultural and organizational considerations.
Academic research further supports this perspective. In the study Toward Successful Bank-Fintech Partnerships: Perspectives from Service Providers in an Emerging Economy (Hoang et al., 2021), the authors conclude that banks seeking to remain competitive must not only invest in new technologies but also ensure that their internal culture and leadership structures are adaptable to digital transformation. Without this critical alignment, even the most advanced technological investments risk failing to deliver long-term value.
The Silo Issue: A Major Barrier to Digital Success
One of the biggest barriers to fintech adoption in traditional banks is organizational silos. Business, compliance, risk, IT, and customer experience teams often operate in isolation, each with its own priorities and decision-making processes. This fragmentation isolates digital innovation, preventing integration into core operations. The outcome? Slow decision-making, inconsistent customer experiences, and digital solutions that fail to scale.
In contrast, fintech startups thrive by fostering cross-functional teams, rapid experimentation, and seamless tech integration. Unlike traditional banks with rigid hierarchies, fintechs prioritize speed, collaboration, and iterative development, allowing them to quickly adapt to customer needs.
Culture, Decision Making, and the Right Talent
Beyond technology and structure, one of the most overlooked reasons for digital transformation failures is culture. Many banks still rely on legacy decision-making frameworks that are too bureaucratic, risk averse, and slow to support the speed and flexibility required for digital success. Without a shift in mindset, even well-funded digital initiatives will stagnate.
Talent gaps further compound the issue. Digital transformation requires a completely different skill set than what is traditionally found in banks—the ability to interpret regulatory impact, implement digital risk frameworks, and design customer-centric solutions using emerging technologies. Banks that succeed in transformation invest in the right mix of digital strategists, transformation advisors, and product development specialists to drive real change.
How Banks Can Succeed in Digital Transformation
To move beyond a technology-first mindset and create digital transformation strategies that are sustainable and effective, banks need to focus on three critical areas, each essential for long-term success: digital culture improvement, prioritization of digital initiatives, and operating model optimization.
A strong digital culture is the foundation of effective transformation. A necessary first step is conducting a digital readiness assessment to identify barriers that hinder adoption and pinpoint opportunities for cultural improvement. By evaluating leadership alignment, employee engagement, and decision-making structures, organizations can foster a more agile, innovation-driven environment.
Prioritizing the right digital initiatives is another major challenge for banks. Many pursue multiple projects simultaneously, without a structured approach to identifying which will deliver the greatest impact. Performing a digitalization audit helps institutions to map ongoing and planned initiatives, assessing their alignment with business strategy, regulatory requirements, and operational effectiveness. This ensures that banks focus on high-impact projects, maximizing efficiency and minimizing wasted investment.
In today’s economic and regulatory landscape, banks must focus on high-impact digital initiatives that enhance compliance, efficiency, and customer experience. Rather than dispersing resources across fragmented projects, banks should prioritize embedded finance and Banking-as-a-Service (BaaS) to integrate financial products, cybersecurity protections, cloud modernization, AI-driven personalization for deeper customer engagement, and RegTech solutions to streamline AML and fraud prevention.
Finally, removing silos through operating model optimization is key to successful transformation. Many banks struggle with fragmented teams and legacy structures that make digital integration difficult. By analyzing and redesigning end-to-end processes, banks can eliminate inefficiencies and ensure that digital initiatives are embedded across all functions. Also important is the restructuring of governance models to enhance cross-functional collaboration, allowing business, technology, and compliance teams to work in sync. This approach improves agility and accelerates innovation, strengthening overall operational performance.
Lessons for Future Transformation
The failures of bank-led fintech ventures underscore a crucial reality: digital transformation is not just about technology—it’s about redefining how banks operate, make decisions, and engage with customers. Banks that successfully transform their digital culture, governance, and execution gain a competitive edge through faster technology adoption, higher employee engagement, and more effective digital strategies. Banks that fail to make this shift will continue to face costly missteps, missed opportunities, and difficulty competing with more agile, tech-native challengers. The future of banking belongs to those that treat transformation as a business imperative, not just a technology initiative.
By Richard Hills. The information contained in this article represents the views and opinions of the author and does not necessarily represent the views or opinions of K2 Integrity.