Future Agile Role Model in the Financial Industry


Future Agile Role Model in the Financial Services Industry

A Product Owners Perspective

The financial services industry is still working with old established digital frameworks and solution approaches. The future adopted “Agile Role Model” is the solution. This product owner centric model considers agile frameworks (e.g., SCRUM, Kanban etc.) as well as the specific ecosystems and complexity of the financial services industry.

The financial services industry must become digital

Living in a more and more digital world, both customers and employees demand an easy and seamless use of technologies, e.g. money transfers with Venmo. Therefore, banks and insurance companies need to integrate digital solutions to meet the demand for innovative and easy-to-use IT solutions. Large-scale projects within the financial services industry aimed at the extension, enhancement or simplification of their technologies, such as core systems from Oracle, Temenos, FIS, Avaloq, etc., will face extraordinary challenges within the next decade. This can be attributed to the fact that they are mostly characterized by long project durations and very high costs, making their seamless and quick implementation and a reduction in costs very important. In addition, introducing a new technology or updating the existing system often reduces costs in the long run and allows for better control of the operational side as well.

Whitepaper | Future Agile Role Model

Go agile now or exit over time

The financial industry currently faces several major challenges that make a successful, efficient and fast implementation of new technologies and systems more important, but also more challenging than ever. 1 – As projects centered on core systems are very expensive, complex and lengthy, there is a high risk of failure and of issues caused by flaws in the execution process, which can pose an outstanding economic risk to the company. In times of high economic pressure on banks, there is an immense interest in saving money by both faster execution and a reduction in the number of errors and subsequent adjustments. 2 – Additionally, it has become inevitable that banks go digital since new talents, current employees and customers demand state-of-the-art technology and user-friendliness and are likely to seek out other companies if their expectations are not met. Furthermore, companies in the financial industry must adapt to the rapidly changing business environment, driven by their competitors and innovative FinTechs (due to open banking), which are offering very competitive solutions. Otherwise, they jeopardize their competitiveness by missing out on promising digital opportunities. 3 – The implementation life cycle (time-to-market) is often very slow, with large projects taking several years until completion. In times of new technologies like Artificial Intelligence, Big Data, and Smart Data, which are often driven by aggressive technology companies from all over the world, there is an increasing necessity for companies to prove the systems’ functionality upfront, during the development process, and deliver a solution in a short period with a limited budget. Otherwise, the system is at risk of being outdated by the time it is finished, making a step-by-step implementation and go-live combined with a shorter time-to-market a key to success.

Agile in the financial industry is a different animal

An increasingly high number of financial services enterprises are using agile approaches for implementing new systems these days. However, they often neglect to adapt to the specifications of the financial sector and thus risk a less successful project. This is because agile implementations of projects like online platforms (e.g. booking.com, hotels.com etc.) are entirely different from projects in the financial industry. Special characteristics must be considered to avoid challenges due to mismanagement of agile projects. In particular, this is because of: (1) lack of knowledge of the banking system’s complexity, which is characterized by different core systems, (2) multiple vendors and system providers involved, (3) coordination issues between agile and non-agile units/suppliers, (4) weak execution of agile processes and ceremonies due to lack of agile mindsets/principles.

Get it right or pay the price

The financial industry has not yet overcome its current challenges and continues to work with established frameworks and solution approaches. The old mindset in a new guise is one reason why so many digital projects are unsuccessful; they suffer bad product quality or lack specificity to customers’ needs. New product owners misunderstand their role and react as if they were still project managers with waterfall approaches.
The Future Agile Role Model is the solution: It takes into account both agile frameworks (e.g., SCRUM, Kanban, etc.) and the complexity and specific ecosystems of the financial industry. Three task´s clusters are the key to success:

  1. Knowledge Leader
  2. Intermediary
  3. Administration

For further details please download our whitepaper here.

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Dominik Moulliet
Director | Consulting

Thomas Völker
Manager | Consulting

Dr. Torben Küpper
Senior Consultant | Consulting