Agile for financial institutions

Financial services in a state of flux

The financial services industry is at a tipping point—either disrupt or be disrupted. A number of innovative financial technology firms (fintechs) are winning over a new breed of clientele—those that demand customized and targeted experiences. One Fortune 500 CEO famously described the situation as an elephant being chased by a few greyhounds. So, how does the elephant retain its power and still achieve the agility of a greyhound?

This is where the Agile Manifesto comes in. Released in 2001, the manifesto outlined a set of values and principles for developing better software. Agile methodologies like scrum have now become quintessential to software development.

The popularity of Agile in financial services has exploded the past couple of years. Agile coaches, scrum masters, and product owners are in demand like never before. Teams are running sprints and conducting ceremonies. But how much of this is delivering fast and frequent value to customers? Unfortunately, not a lot.

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Agile for financial services: Potential that comes with pitfalls

Agile values and principles are often easy to understand, so what exactly is going wrong? With some notable exceptions, Agile adoption is often a mere exercise in retitling people, running sprints, and conducting ceremonies, rather than a way of transforming processes. Such organizations continue to face the same challenges as with traditional Waterfall approaches:

• Overemphasis on adopting tools, practices, and methodologies often comes at the price of real, quantifiable business outcomes.
• Force-fitting a scaling framework that has worked elsewhere or blind rollout of a radical structure that doesn’t align with the organization’s DNA.
• Adopting Agile in a silo, without wholehearted support of business partners results in doing the same old things, just in a different way.
• Trying to sustain adopted Agile practices without engineering investment (e.g., test automation, CI/CD, monitoring).

Many teams that have successfully adopted Agile in financial services have taken a value-driven approach. They encourage cross-functional collaboration, keep progress transparent, make decision-making efficient, and continuously inspect in order to improve. They make investments in tooling and infrastructure to reduce capital costs, avoid reinventing the wheel, and minimize overall delivery risks.

Agile is about incrementally delivering value, not code. It’s about reducing delivery risks. It’s about maximizing the work not done.

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What makes Agile in banking different

Financial services institutions often operate in an environment that is fundamentally different from that of technology product companies. Successful adoption of Agile is contingent upon addressing important differences in the areas listed below.

1. Scaling Agile beyond a team: Often program goals are too complex to be achieved by a single scrum team, requiring adoption of scaling frameworks to deliver value.
2. Managing globally distributed teams: Due to cost and talent constraints, it’s not uncommon to have teams split across locations, posing certain challenges to Agile banking adoption.
3. Working with third-party service providers: Many critical applications are built by integrating customized versions of third-party products, resulting in architectural complexity and continued reliance on service providers.
4. Collaborating with legacy, Waterfall teams: Interdependent systems often result in Agile product teams having upstream or downstream dependencies on some legacy teams who may not be as responsive to change or as flexible with testing.
5. Measuring success: Monitoring tools, as well as Agile project management software, can track a lot of data points, but the key is to select a few that can reliably tell the tale and allow immediate course correction.

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Ready to get started?

Agile, when paired with DevOps and a cloud infrastructure, could be a game changer for financial services organizations. But the journey to Agile adoption can be painful, as old habits die hard. Financial services institutions can’t simply “plug and play” the same Agile practices used by technology companies. Rather, they will need to adapt these practices to their unique industry context.  With the right approach, financial services organizations will be able to harness the power of Agile to achieve both fast and frequent value delivery.

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