How Agile helps building a bank of the future

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In order to compete in the fast-moving digital world, banks have to let go the legacy infrastructure and operational processes. To succeed in a digital realm, their aim should be toward creating the best customer experiences. By increasing the market responsiveness, quality of services, affordability, and sustainability, banks can not only offer better customer experiences but also result in the strengthening of their own foundation as well. 

The growing complexities and accelerated changes in the banking industry are necessitating the adoption of Agile practices. Francesco Di Marcello, Partner at McKinsey points out that “Agile de-risks the digital angle of your strategy. For years, banks have been trying to “value assure” the results of large IT programs, after experiencing large and expensive failures. Now, the paradigm has shifted. Market and client behavior is changing so fast that it is very difficult to plan all of it before you get started, to detail the content of a five-year project right from the start. An agile approach allows banks to solve pain points in the client journey in a micro fashion, and to build on these changes incrementally. 

Leading the banking transformation – Lloyds Banking Group 

Lloyds banking group, the largest digital bank in the UK, is transforming their ways of working by following a digitized, simple, low-risk, customer-focused strategy, which would enable them to deliver leading customer experiences. The group serves over 27 million retail customers, out of which 72% of their customers use two or more channels for interacting with them. Lloyds banking group is leading digital functionalities through continued innovation and Agile adoption. They followed a three-phased approach to succeed in their digital initiatives: 

  • Phase 1: Building digital foundations, creating a scalable digital platform, providing choice and convenience for their customers. 
  • Phase 2: Creating the largest UK digital bank, enhancing digital capabilities, and undertaking customer journey transformation to improve experience and business efficiency. 
  • Phase 3: Digitizing the group and transforming ways of working by enabling 
    • Broader and deeper digital transformation 
    • Simplification and modernization of their IT and data architecture 
    • More agile and more efficient ways of working 
    • Investing to build key skills of the future with greater in-house capabilities 

Now as the group is approaching completion of the third phase, Robert Eriksson, their Digital CTO, summarizes the journey as, “The journey so far has been long and hard, particularly as we are also faced with a mountain of technical debt built up in an organisation that is 250+ years old and has experienced multiple mergers and divestments along the way. But by keeping things very simple, taking small steps forward (and some backwards) and letting the results speak for themselves our progress so far has helped build the necessary credibility. It is a marathon, not a sprint, and I would use two words to sum up the recipe for success. Grit and perseverance. 

 Agile transformation = banking transformation? 

Contrary to the common assumption that Agile practices would render the banking processes slow, inefficient, and risky, they actually simplify them while significantly reducing the risk factor. All that is needed is a pragmatic approach to its adoption and implementation. 

Although Agile manifesto and principles were formulated for software development processes, they actually apply to all the functions within an organization, including marketing, human resources, and customer services. So, when banks embark on their Agile transformation journey, they sign themselves up for a successful digital transformation as well. However, despite the benefits, organizations seldom taste success in their Agile initiative in the first attempt. 

Agility requires flexibility. This means that prudency and methodical processes may prove counter-productive to a banking organization’s growth. With open banking now paving its way toward normalcy, with customers setting higher expectations with each technological advancements, agile transformation is anything but evitable. For banks to transform them according to their customers’ needs, they need to incorporate five critical elements – strategy, structure, people, process, and technology. By proactively and pragmatically addressing these elements, banks can actually be agile instead of just doing agile. 

The right way of doing agile to become truly agile 

The right way to become agile is to appropriately address three key areas – method, people, and technology. 

  • Convince your people 

Agile is more about the individuals and interactions than it is about processes and tools, dictates the Agile manifesto, and rightly so. Before disrupting the processes across the organization, it is important for banking transformational leaders to take a step back and make effort to align their people and organizational culture.  

Robert Eriksson says, “People build solutions – not processes, not tools, not practices – people. While adopting an Agile method can be a catalyst, it’s really the DNA and mindset within the organisation that need to change. With the right people and mindset, you can achieve wonders with almost any delivery method, including Waterfall, but the method won’t get you anywhere if culture and behaviours are wrong.”  

  • Do not be prude about your method 

There is no one-fits-all solution for Agile adoption. It is all a matter of permutations and combinations of what works for a banking organization and what does not. Methods are only the means to agile, they are not the holy grail of agile. Therefore, it is not required that they are followed to the letter. Here, flexibility of processes, tools, and ways play an integral role. 

  • The easy part – technology 

When you take care of the people part and the processes part, the technology part actually becomes a cakewalk. This is because, the main difficulties in technology adoption arise due to inflexibility and non-alignment from people and methodologies. After establishing credibility among their people and streamlining the processes, now banks can decide which technology suits their needs the best and implement them. 

You did all of this, but did you test? 

The ratio of Agile adoption failure is much higher than the success. Organizations cannot fathom the reason of failure despite doing everything right and following all the best practices. Banks today face a number of challenges such as performance failures, lack of regulatory compliance, security vulnerabilities, complex functionalities of banking system, among others. In order to ensure that the transformation is achieved seamlessly while creating great customer experiences, agile testing to validate the end-to-end processes becomes necessary. Banking application testing and agile testing ascertains impeccable performance and guarantees the desired organizational outcomes.  

Cigniti is associated as testing partner with leaders in the banking space across the functional spectrum like retail banking, corporate banking, mortgages, cards, and payments. With our repertoire of proprietary tools, reusable artefacts, and automation framework, we leave a positive impact on the market responsiveness of the banks. Talk to us today.