In a recent post, we established why financial organizations–from banks to payment solutions providers–need to be Agile. Yet many financial institutions still make the mistake of only transitioning to Agile in name only. They adopt the use of post-its and iterations, while still holding onto bureaucratic silos and legacy systems that threaten to hold the entire sector back.
Here we’ll identify the biggest obstacles finance CIOs and CTOs face in becoming lean/Agile and finding economies of flow. Plus, we’ll outline steps to follow to invest in your organization’s future with a true Agile transformation.
Be Aware of Financial IT’s Biggest Blockers
In this modern era, it can feel like the financial sector is at risk of being pulled in two directions, with traditional and regulation on one side and increasing digitalization and disruption on the other. If we look at the problem another way, however, increased agility can actually leave your financial organization better positioned to navigate changing regulations and new security threats that don’t even exist yet.
So why hasn’t the whole industry successfully adopted Agile? The answer is that these blockers tend to be carried over from old organizational structure and can all too often stand in the way:
- Linear lines of business – Many banks and financial institutions have grown more functionally siloed over the years, not more cross functional. This can delay any attempt to revolutionize the way traditional banking is done, because it would require multiple lines of business and stakeholders to get (and stay) aligned. If the idea or product makes it through the bureaucratic process, the sheer amount of communication and coordination involved will dash any hopes of a quick time to market.
- Legacy systems – Outdated, legacy systems are hampering progress across fintech as a whole and especially for the biggest players. For them, mergers and acquisitions tend to result in loads of technical debt, lots of integrations, and other challenges smaller fintech startups don’t have to overcome.
In their study Financial Services Technology 2020 and Beyond: Embracing Disruption, researchers at PricewaterhouseCoopers list updating IT operating models and simplifying legacy systems as top priorities for financial leaders. They’re careful to point out that even “regulators…have started to adopt new technologies that will revolutionize their ability to collect and analyze information.” As you prepare your organization for these obstacles to Agile, it’s important to acknowledge that the challenges, costs, and risks of continuing to maintain the status quo will only increase the longer you wait.
How to Lead Your Agile Transformation
Once you’ve led a mindset shift aimed at overcoming obstacles to agility, it’s time to start preparing your organization, team, and tools.
1. Assess your organization – Ask what the organization wants to be and why, then align everything the team does with that strategic goal. Ask how you’ll know when you’ve reached that goal by establishing clear metrics of success, including leading and lagging indicators. Alongside these metrics, set realistic milestones for change. You can expect change to happen gradually at first, then suddenly. Finally, make sure you understand your end-to-end customer journey. Most companies end up rushing this–shoving classic project management techniques into iterations and saying they’re Agile. As a result, they don’t gain the customer intelligence they’ll need to drive ongoing growth and profitability.
2. Get clear on expectations from your team – Start mapping value streams, toolchains, and culture. These can give you a real picture of what teams are doing today, versus what they’re doing “on paper.” Create a matrix of the team’s skill sets, then compare that to a matrix of skills needed for your product. From there, you can build a roadmap for bridging the gap. Align all leadership team members on regularly giving your talent problems to work on, not just solutions.
3. Modernize your tool – By modernizing apps for core business processes, like Clearent did when they tapped 3Cloud (formerly Polaris) to modernize their merchant onboarding tool, you’ll ensure your applications are ready to evolve with you. Same goes for your architecture, which needs to be enabled to interact with data and systems that could be anywhere in the future. You’ll also need to make an API plan. The European Union and UK have already passed fintech-friendly laws requiring banks to create and open APIs.
Working with the right partner can mean the difference between settling for Agile in name only and transforming into a highly evolved Agile organization. Contact us to work through the nuances of the steps above and learn about how our experience with financial services IT can ensure a successful transformation.