By Sahil Khullar

Sahil Khullar

Virtually every industry is undergoing a process of digital transformation, and the financial services sector is no exception. Fueled by artificial intelligence (AI), cloud computing, and more powerful global digital connectivity than ever, the sound future of financial services means prioritizing a seamless, personalized, and transparent customer experience. To develop efficient, customer-driven products and services, financial services firms need to recognize and accept that technology is at the core of successful products.

The state of digital transformation for financial services

Digital transformation is the process of using growing technologies to create new or modify existing digitally augmented business processes, culture, and customer experiences to meet changing market requirements and customers’ expectations. While most industries underwent a huge digital transformation during the COVID-19 pandemic, there are some industries that exhibit greater flexibility to transform faster than others. For example, businesses with long-standing traditions, massive equipment, or legacy systems firmly in place, including financial institutions, are still hard at work to catch up to the digital transformation wave.

One of the reasons that financial institutions are falling behind is because they haven’t committed to change and have not aligned their business and IT teams with a well-defined mission and united front. Without that step, there will be patchwork fixes to out-of-date technology and slow adoption of new applications. Then, when financial institutions finally adopt these new solutions, they might be pieced together across an organization one at a time, sometimes resulting in applications that struggle to communicate with each other. Other challenges include inadequate functionality, siloed data, and risks to security and compliance, overall hindering the growth and progress of an organization.

Instead, financial service institutions must embrace a reinvention mindset that emanates from the top down to ensure digital transformation becomes a recognized ongoing and ever-present need, rather than a one-time event. To accomplish successful digital transformations, investment banks, commercial banks, credit unions, and fintechs that adopt an agile approach are more likely to succeed in their technology initiatives.

How agile implementation enables customer-first digital transformation

To take advantage of AI, predictive analytics, and future technologies it is necessary to adopt agile project implementation that addresses the business goals aligned with the provider’s mission and recognizes customers’ needs as the top priority.

Agile implementation is an iterative approach to project management and software development that focuses on delivering value to the customer faster and with better results. Instead of “perfecting” the product in all facets and goals for launch, agile methodology means product developers and business operations know clients will have feedback about the product and incorporate that feedback into an incremental development process so anticipated changes can be made with lower cost and better results. Agile operates alongside the concept of a minimum viable product (MVP). Coined by Frank Robinson in 2001 and popularized by Eric Ries and Steve Blank, MVP refers to creating a product with just enough features to bring it to market with the notion of making improvements based on customer feedback. Focusing on delivering an MVP gives teams an agile approach to drive 80 percent of customer satisfaction with 20 percent of the work. Agile methodology can be applied to any business or product. Its rising need across today’s financial services is shaping which institutions are attracting and retaining satisfied customers in today’s fast-paced and competitive marketplace. Critical success factors for MVPs across financial services include an agile mindset, a clear understanding of the target market, and a team with the right product skill sets to address both current and future needs.

The need to adapt becomes greater due to a highly competitive marketplace where being the first to market can significantly increase growth and provide businesses with the information that they need to make customer-centric changes. Agile focuses on customers first, making it an ideal option when adapting within a volatile and ever-evolving marketplace.

Successfully adopting agile implementation across an organization starts by establishing an agile mindset from the top down. It is a mindset that proposes more autonomy for team members to act as leaders themselves. This gives them authority to make time-sensitive decisions aligned with budget and strategic goals of the organization, therefore saving time by decentralizing the weight and process of decision-making. This only works if everyone, including leadership and stakeholders, adopts and commits to this way of thinking across the organization.

From there, it is important to ensure the right team is in place to implement the solution—one that is united and communicates with data management, business operations, and supply management teams. Understanding product features first is essential. Without clearly articulated goals, it is impossible to assemble and train a cross-functional team that seamlessly addresses those needs. These product features must align with target market needs and business goals, but autonomy for developers is key. Agile earned its name because it provides teams with autonomy to drive collaboration among team members, transparency across the business and its networks, and adaptation to customer needs.

Agile project frameworks are more likely to result in delivering customer satisfaction and meeting their expectations. For example, risk managers require a dashboard that can bring data from multiple systems to help them make risk predictions and certain risk-related decisions. If the product owner suddenly discovers that the data they have consumed and released to risk managers just a week ago is inaccurate or low quality, agile enables this to be an easy fix taken in the next or same sprint for the team to remove that data source or change it to something else and easily communicate that change to risk managers. In traditional project delivery, risk managers would have consumed the wrong data for weeks at minimum before discovering they don’t have accurate data, forcing them to move backwards. Agile reduces costs and risks to enable those changes to be made quickly by keeping clear visibility on the dashboard after launch, inviting feedback, and being prepared for change. From there, teams need to continue to clearly articulate changes to customers, prospects, employees, vendors, and stakeholders.

The trend to customer-driven financial services

Financial services’ customers have distinct desires contingent on technology. They look for personalization, transparency, and a seamless user experience. Every customer is unique and as the market grows more diverse, so do customer needs. They expect personalized offerings that make it clear the financial institution “knows” them. Customers want to know their financial services organization, too. Transparency about the customers’ information, finances, and security is vital, as every customer needs full visibility and control over their assets. This includes fraud detection, notifications about fees, or risk factors and contractual changes. Customers also want transparency about internal operations, stakeholder changes, other customer experiences, or even employee satisfaction. Transparency builds trust and reliability, creating better customer relationships and a quality company reputation. Further, customers expect a seamless experience when working with financial services. They don’t want to overspend their time tackling small tasks or moving between different applications or accounts when they’re handling investments. Processes that used to be complex and manual such as stock trading or investment management, are now happening over cloud-based applications. For example, it is important for developers to consider how to lower the number of clicks a customer needs to make to get information and maintain this as a benchmark for a seamless user experience.

Technology trends shaping financial services digital transformation

There are countless technology trends impacting business expectations. As such, it is impossible for an organization to commit to all of them effectively. Instead, start by aligning technology with customer needs. To address personalization, transparency, and a seamless user experience, financial services institutions must prioritize opportunities for cloud computing, AI, and virtual reality.

Cloud computing is re-establishing how applications, storage, on-demand services, computer networks, or other resources are accessed through internet connectivity. Cloud technology has become the option of choice instead of the server-based, siloed technology of the past. Computing processes and storage capabilities across the cloud offer options that are flexible and scalable with the company’s growth, a vital need for agile implementation. In addition, agile teams and customer relationships become empowered through simple and efficient communication and collaboration across the cloud, enabling shared growth and education across the organization.

AI is leading the digital transformation wave, enabling new levels of automation, machine learning, and predictive analytics. In financial services, front-end implementation of AI is supporting customer relations by automating repetitive or “low added-value” tasks, such as constant replies to frequently asked questions. Instead, with natural language processing for customer service chatbots or image recognition for account authentication, AI enables financial institutions to improve the customer experience. AI also creates opportunities for better personalization, whether ensuring users’ preferences and information are securely available across their applications or using predictive algorithms to make the best product offerings tailored to a customer’s current and future needs. AI’s influences in the middle and back offices empower anti-fraud measures, predictive analytics, and improved internal workflow to boost productivity, reduce the potential for human error, and lower costs. By automating data collection, organization, and analysis, financial services organizations make better data-driven decisions based on past and current market behavior.

Virtual reality technology is operating alongside predictive analytics to help customers to envision products and services in new ways. In financial services, this is particularly relevant when putting customers in a future scenario designed just for them, such as retirement options or investment portfolios. The added visualization of a scenario helps customers gain a sharp picture of their financial services options as ongoing relationships that can last well into the future. Further, virtual reality helps make an intangible sector like financial services into one the customer can interact with. It’s proven that customers who are able to demo or touch a product become more attached, developing a feeling of ownership that results in a higher desire to keep that item or service. Financial services may not have physical objects for customers to carry around a store, but they can leverage virtual reality to establish palpable connections.

The realities of agile implementation

When financial institutions can narrow the gap between the business and IT and recognize that everyone is a stakeholder to some degree, is a good place to start. When multiple internal and external stakeholders have varying or even competing interests, agile implementation can provide the answer financial services firms seek. Traditional project management is based on layers of project managers that require documentation, deadlines, clear expectations, and regular benchmarking during the development process to maintain a tight level of control over projects. This might seem like the right approach when it comes to financial services. It worked in the past; however, financial services and their customers look different today. In particular, the pace of digital transformation has quickened. Financial services’ customers are riding the wave, but businesses must make active commitments to keep up. Agile project implementation offers flexibility, transparency, and collaboration that supports customer interests. Agile also maintains that flexibility for the abundance of stakeholders present across the financial services ecosystem. Due to the nature of investments and financial wealth management, customers are stakeholders, too. When organizations adopt an agile mindset across the entire enterprise, business operations and developers can work in tandem, establishing clear business requirements from the beginning that keep the customer in mind. Agile also provides developers the freedom and autonomy to use their programming skillsets, thereby increasing their accountability to address those goals within the scope of their own vision. Through quarterly planning, sprint planning, and other collaborative sessions, agile makes constant conversation and collaboration about current and future goals a consistent part of the organization that accounts for the ever-evolving nature of business today. With the right agile tools to support a shared mindset, projects are scalable to shifting needs and growing businesses. Most important, agile decentralizes the decision-making process to bring customer behavior and feedback earlier into the development process, bridging the gap between IT and operations while keeping the customer top of mind, enabling businesses to better address customer needs and maintain lower costs.

Agile is a path to embrace customer-centric growth

Digital transformation is driving innovation amid a constantly and rapidly changing marketplace. The adoption of technology within financial services sectors contributes to increased satisfaction among users who receive the consistent service they need without having to jump through hurdles. This next generation of financial services enhanced through technology means businesses will seek transformation balanced in speed, efficiency, and a high-quality customer experience. Agile implementation serves as the ideal mindset and framework to help financial service firms transform while keeping daily operations smooth and revenue-generating. The result: is a seamless shift to improved, personalized, and customer-centric financial services.

About the Author:

Sahil Khullar holds an undergraduate degree from University of Nebraska at Omaha with majors in finance, banking, and investments. He also earned a master’s degree in management information systems from the University of Nebraska at Omaha as well. Currently, Sahil is working as a senior consultant in fintech and he specializes in agile project management. Contact [email protected].