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In this blog, we look at how organisations in the financial services sector can adopt agile methodologies to quickly adapt to technological change and deliver faster ROI.

88% of global finance leaders see new technology as a threat to their existing business model with, unsurprisingly, 81% of banking CEO’s being concerned about the speed of technological change.  However, to be more competitive in the market, established financial service organisations need to embrace this change and employ faster, alternative development methods.  This will enable them to quickly adapt to new business requirements, allowing the customer, or end-user, to be at the forefront of all decisions.  Huge investments are granted to modernise legacy applications and realising the value early on can be difficult to achieve and interpret using traditional software development processes.

Agile software development, when done correctly, enables financial service organisations to deliver faster Return On Investment (ROI). If you are a financial services provider, this may be something your organisation is currently working on or is already familiar with. You may be new to the methodology and have no insight into the gains or have some experience but not ready to commit. Everyone has a different story to tell, some good, some not.

Why? There is a common misconception that Agile is an out of the box approach, where what works for one team, or organisation, will be useful for the other.  There is also the concept that organisations can pick and choose what qualities of Agile they want to incorporate into their existing processes – not something to be discouraged, but it’s not Agile.

However, the question to answer here is, how would you, or your organisation, benefit from using the Agile Methodology within the financial services industry?

Firstly, let’s contrast traditional software development processes i.e., Waterfall versus an Agile methodology:

Waterfall Agile
Has less, more infrequent customer engagements, for example, a release every 6 -12 months. Ensures that the customer is part of each ‘Iteration’ (typically every 2 weeks) to facilitate a ‘feedback loop’ to meet the latest requirements.  This puts the customer at the forefront of the decision-making process, which leads to greater customer satisfaction.
Changes to requirements to meet ever changing customer demands, market trends, new technologies, etc. are difficult to be agreed and/or incorporated due to often arduous change control procedures. Working in ‘Sprints’ or ‘Iterations’ reduces risk. The focus on continuous delivery allows for a regular review of ROI.
The linear approach to Waterfall, where phases are sequential and has stages that deal with 1) what you need to do before a project 2) during a start-up phase 3) planning phase 4) execution phase and 5) closing phase – the testing comes at the end, which brings many inefficiencies. Changes to requirements are encouraged and can be seamlessly absorbed at any stage, even late in the process.
Testing is a crucial and integrated part of each iteration, which means that the quality of the product is known at regular increments.

All organisations face challenges, however some are larger, have a greater impact, and are more difficult than others. What is important here is that a workforce not only has visibility of these but also that they feel empowered to make positive changes.  Agile proposes an ability to continuously improve, and to inspect/adapt every issue towards delivery, learnt from past experience.

The need to minimise risk is more prevalent in the financial services industry, resulting in many decisions requiring multiple levels of approval before authorisation, often taking significant time.  A fast-paced, ever adapting Agile methodology can sometimes seem very unnerving considering that decisions are required to be settled promptly i.e. within the Iteration.

Traditionally, financial service organisations are highly structured and hierarchically organised with each position having specific roles and responsibilities. Agile promotes flexibility and transparency at a team level, replacing ‘roles and responsibilities’ with ‘Accountabilities’.  Having a cross functional team focussed on a longer term ‘Product Goal’, as well as an iterative ‘Sprint Goal’ is a shift in thinking from departmental deliveries.  Having an organisation-wide approach is something that needs to be considered when adopting Agile, and letting it scale.

If we take ING, the established Dutch banking group, as an example, it took inspiration from Google, Netflix, Spotify, etc. and set about on the journey to amend its thinking from a traditional approach to an Agile model, prompted by the change in customer behaviour.  In an interview with McKinsey & Company, the former COO stated,

It’s imperative for us to provide a seamless and consistently high-quality service so that customers can start their journey through one channel and continue it through another—for example, going to a branch in person for investment advice and then calling or going online to make an actual investment. An agile way of working was the necessary means to deliver that strategy”.

Upon quantifying the impact of adopting an Agile approach, he was quoted as saying,

“Our objectives were to be quicker to market, increase employee engagement, reduce impediments and handovers, and, most important, improve client experience… In addition, we are doing software releases on a two- to three-week basis rather than five to six times a year, and our Net Promoter Score and employee-engagement scores are up multiple points.”

The most frequent reason organisations adopt an agile methodology is the need for speed.  According to the KPMG Global Agile Survey conducted in 2019, 68% of organisations stated that faster product delivery was one of their key drivers for agility.  If we consider the impact that COVID-19 has had on organisations and how quickly they were required to adapt, it is unsurprising to find that McKinsey & Company reported 93% of business units that had fully adopted an agile model before the crisis outperformed units that hadn’t.  Coupled with the declaration from the Harvard Business Review, that 60% of companies experience revenue growth and profit increase after using an Agile approach, it is safe to say, Agile is here to stay.

Jumar Technology is a specialist in an agile methodology and supports financial service organisations around the world to modernise, migrate and develop new applications at speed.  If you would like to discuss agile versus waterfall development, how to move to an agile methodology or would like to review and improve your agile operations, contact us.