Agile framework: accelerate your digital banking product development

The current Landscape

The reasons for the acceleration in change today can be summed up to the following 3:

• Regulation (ex. PSD2, open banking, changes due to COVID-19) 
• Market-imposed. Since the market is now more open to anyone for entrance and penetration, innovation is introduced more often  
• Re-adjustment to the customer needs, which are also changing rapidly.

On the one end of the fast delivery spectrum, we find fintechs. You know them. They are the talk of the town. Maybe your friends have shown you on their phone screens the latest app they downloaded, praising its intuitiveness. Revolut, N26, Starling (and for the real connoisseurs, bunq) are some of the most well known examples. 

On the other end of the spectrum, you have traditional banks, small or big, not in sync with this new landscape, trying to stay relevant. However, the aforementioned fast-change cycles leave them short of breath, trying to adjust to the constantly evolving market where new offerings are coming out every week by innovative players.

To make it worse, fintechs and banks are not the only rivals in the digital banking landscape. 

As Saul van Beurden, ex. Chase, now Wells Fargo, puts it:

“If you look at the competitors, they are chasing us(...). These are all the traditional incumbents, but also the fintechs, and the tech giants like Amazon, Apple, and Google."

He continued, "And those later companies, they teach our customers what it is to have an experience that is without any fuss, and totally without friction, and that's what they expect from Chase as well... We know that the feature launched today, can already be history tomorrow, and be overhauled by one of those competitors."

So what do you need to do as a bank? You need to increase your clock speed. Now that's what we all say, and it sounds so easy. And it would be easy if this would be your own single objective.”

And how to do this?

Enter Agile.

What is Agile?

The agile approach to software and product development reportedly came about in 2001. ‘Agile’ is used to represent adaptiveness and response to change during product development. It involves self-organizing, cross-functional teams working in collaboration to develop innovative solutions while offering a shorter time-to-market.

Agile values are summed up in the Agile Manifesto, as the following 4 core pillars:

• Individuals and interactions over processes and tools
• Working software over comprehensive documentation
• Customer collaboration over contract negotiation
• Responding to change over following a plan

How Agile can help in faster delivery?

What does Agile need to deliver fast?

The most common-practice agile tactics are:

1. Create true feature teams. An agile feature team is self-organized and cross-functional which means it includes team members that possess all the necessary knowledge and skills to be accountable for the end-to end work to deliver the product.
2. Eliminate component teams like testing along with the handoffs that they necessitate. Wait times and knowledge scattering are also eliminated along and members of the said component teams are moved into the feature teams empowering them to fully complete testing and code reviews. 
3. Connect the feature teams directly to the business stakeholders and subject matter experts who understand the business needs. 
4. Individuals are fully dedicated to one team. Multi-tasking and context switching can create a drag of as much as 50% on teams which are not dedicated. 
5. Teams are co-located in one physical room which allows them to converse openly with each other yet protect them from outside distractions. Studies have shown that co-location doubles productivity. 
6. Small delivery circles. Backlog items are “done” and released to production at the end of every sprint (usually 2 week long).  
7. Implement automated regression testing to provide feedback faster and increase speed of development.
8. Move from legacy systems to a new common technology platform.  
9. Finally, the feature teams have a built-in process for continuous improvement so they are able to examine their results, continue to eliminate waste and increase productivity every sprint. That makes potential downfalls and problems easier to pinpoint and take care of.

Traditional banks showing the way

Effective implementation of Agile transformation means moving away from long-term, project-based planning and getting closer to theme-based planning where priorities are known to continuously shift due to technology opportunities, market strategy or regulatory requirements. More importantly, agile transformation requires change in organizational culture since incorporation of agile methodologies requires application and acceptance of new values, norms, behavior, management style and roles, which is extremely difficult to achieve. 

However, the road is not untraveled. Several traditional banks have been paving it in the last 10 years: Barclays, ING, Bank of America, BBVA, JP Morgan-Chase, just to name a few. They went on investing in digital transformation and are already reaping the benefits.

Remember: Agile is not one-size-fits-all. Every company implementing it should readjust it, to fit their own, specific needs.

However, there are some common steps/success factors that each of the studied banks followed:

1. It all begins with an observation and a realization: Modern banking environment is hyper-competitive with new, non-traditional and highly disruptive challengers in different stages of maturity. To stay competitive, large financial institutions are under intense pressure to innovate faster and better, achieve greater operational efficiency in order to build high quality products, reduced time-to-market and improved ROI.
   “We came to the realization that, ultimately, we are a technology company operating in the financial-services business”

   Peter Jacobs, ING

2. Leadership shows the way. They learn about agile and lead by example. They are committed to the change, act as role models and mitigate, the expected, resistance. In Bank of America, the Director and his leadership team took Scrum Master certification training themselves, before planning Agile training for the rest of the organization and key business stakeholders.
3. Clear communication. People must understand the reasons behind the change and believe in it so that they adjust their behaviour accordingly. In order for all members to be as effective they can, they must have a clear vision of the goals and how they get closer to them, sprint by sprint.
4. Training and development of employees as well as support in letting them learn by doing. 

Honorable Mentions:

1. Gather Insights by running smaller scale, pilot agile projects.
2. Build regulatory compliance into the Agile process rather than enforcing it afterwards.
   “We pivoted to better products, Faster, Safer, Happier. Because, it isn’t about running agile for the sake of agile. It’s about the business outcomes that you try to achieve, one of which is survival” 
   Jon Smart, Barclays

Conclusion

A perfect summation comes from Kenan Rodrigues, Head of Business Transformation, Middle Market Banking & Specialized Industries from this excerpt of his interview at J.P.Morgan. 

Anish: And what are some of the benefits that businesses see from using Agile?

Kenan: Time-to-value, the ability to get your products out there faster, that has revenue upside associated with it. Efficiency, because there is less throw-away, less waste. Improved client satisfaction, because the customer is at the center of everything with agile. And then finally, I would say employee engagement. Employees feel a lot more engaged and empowered when they are innovating and closer to customer impact. Agile has long been the standard development process for software developers and IT teams. But today—when business moves at an extreme pace, and speed to market can be the difference between dominating a market or becoming irrelevant—organizational agility is more important than ever.

From where we, at Scientia,  stand, it looks like Agile is the best weapon to have in your arsenal in order to survive at the Financial Battlefield today and something we strive to implement in our everyday work life. 

What do you think about an Agile approach to digital banking product development?