The financial sector continues to experience rapid transformation as a result of digital capabilities changing how customer interact with financial services. Rather than continuing to rely on existing organizational structures, banks much adopt technology and business processes that can adapt with heightened customer expectations. In this climate, staying competitive means enacting the same agile project management principles and data flows that software development companies use.
To learn more about how banks can become more agile, read on.
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What is an Agile Bank?
Agile development refers to an iterative process methodology that continually builds and tests new products as opposed to traditional methods where a project is completed before delivery. This methodology originally appeared in software companies and was designed to discover requirements while developing solutions through the collaborative effort of self-organizing and cross-functional teams. Adopting Agile methods has proven successful in many cases and a report by McKinsey & Company states, “Agility is the most important means of implementation for digital transformation.”
For decades banks have been able to rely on physical branch distribution models. However, this leaves them vulnerable to disruption from technology companies and fintechs who are able to quickly meet adapt their financial service model to meet customer demands. This is coupled with the reality that banks’ access to their data comes with complexities such as in-house systems development, mergers and acquisitions, and aging core platform, most of which are challenges many new tech competitors do not have to deal with.
After success in several major banking operations, many financial institutions are considering Agile methodology as a viable strategy. JPMorgan Chase & Co. are a notable example who turned to Agile methods, “To enable the delivery of highly personalized, real-time experiences that customers increasingly expect.”
Banks are traditionally structured in functional silos that complete individual pieces of a single process without the benefit of having a complete view of its execution. An agile approach allows banks to build a new culture and restructure their organization’s DNA for dexterous customer-centrism, allowing banks to solve pain points in the customer journey on the small scale while building on changes incrementally.
Agile banks then are marked by the creation of teams who take a holistic view of a process and are equipped to improve those processes for heightened efficiency and customer centered delivery. What is clear is that Agile is more than a buzzword and offers tangible benefits for the financial institutions who apply the methodology properly. To this end, CS Consulting Group’s Cady says, “The large institutions are taking lessons from the fintechs and applying them to their systems. Community banks that don’t recognize this, at some point, they risk becoming irrelevant.”
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4 Strategies for Scaling Agile Transformation in Banks
An Agile way of working focuses more on the “what” of a process and less on the “how,” so it’s not surprising that this methodology challenges traditional banking methods that are often marked by careful and time honored procedures. The focus changes from existing processes to the people and culture that drive a process. However, redesigning and reinventing an organization is no simple task, and it may be unclear how an Agile methodology will work at across a financial institution and it can be difficult to define how these processes can work at scale.
Here are key strategies for Scaling Agile transformation:
- Customer Focus – A fundamental tenet of agile methodology is a focus on resolving and satisfying customer needs. Rather than classic product development and back-end technologies, improving customer experience at each touchpoint becomes the number one priority. Agile efforts must enable development teams to follow a customer-driven Model, where adjustments are made continually based on customer feedback.
- Holistic Perspective – The core of an Agile process is the creation of small teams with multi-disciplinary skill sets assembled to approach new problems with a holistic process view. This is to say that while banks could reasonably access the benefits of digital transformation by cherry picking, the real value of this process comes when these teams can determine how new capabilities or processes affect the broader reality of the customer journey. An agile organization is not the result of a one-time effort, but is rather proof of a continued commitment to end-to-end process review and flexible revision.
- Agile Teams and Process Owners – The efforts of a small team working on unique development and delivery methods should be coupled with Process owners. Agile teams are less hierarchical and product owners, or tribe leads, are given the space to act like entrepreneurs who are fully accountable for the results. Team directives are defined by setting expected results while providing flexible strategies for how they want to achieve those goals. Process owners then are able to work in collaboration with management to create new objectives and review results over time.
- Multiple Iterations – The agile methodology does not end with a single project, but rather is something that should be revisited consistently identify opportunities. Unlike the “waterfall” development method – where a final product is delivered before testing – agile principles enable companies to follow a transparent, data-driven approach that encourages continual testing and learning. This practice also helps in speeding time to market by providing a minimum viable product (MVP) that meets users’ needs and can be adapted quickly.
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Use Agile Squads to Enact Digital Transformation in Banking with Stefanini
For Financial institutions today, creating a comprehensive roadmap for digital transformation is necessary for survival. Stefanini stands at the forefront of digital technology and boasts 30 years of experience with banking clients. Our team of experts are uniquely positioned to assist financial institutions in implementing digital transformation.