By Danny Healy, industry technology evangelist,MuleSoft

The financial services sector is undergoing a turbulent change. Everywhere, new entrants are surging into the market, placing unprecedented competitive pressures on established incumbents. In the UK alone, fintech absorbed over $1 billion of funding in the first nine months of the year; double the amount from the same period in 2016, showing the extent to which the market is growing.

These digitally savvy startups are redefining consumer expectations beyond anything that banks have been able to deliver in the past. According to MuleSoft’s Connected Consumer Report 2017, banks could face an exodus of customers if they can’t provide the personalised consumers want. In fact, nearly a third said they would use Amazon, Facebook, Google and Apple for banking services, believing they would provide greater personalisation.

These pressures are forcing banks to innovate faster than ever before, as they face the choice between becoming the disruptor or the disrupted. As a result, financial services incumbents have shown a growing interest in DevOps to achieve the agility they now require. Banks like Barclays and HSBC, for example, are starting to embrace more agile development practices in certain areas of their businesses.

The next generation of innovation

The shift to DevOps breaks down barriers between IT teams and the business so they can organise around common goals to meet the needs of the bank more effectively. It also reduces lengthy project cycles so teams can focus on quickly delivering new features or functionalities, which can sometimes be brought to market in under a day. That speed is especially critical in customer-facing services, such as retail banking, where the biggest push towards DevOps is taking place.

However, moving to DevOps isn’t as simple as just turning off the cold tap and turning on the hot tap. Banks are amongst the most heavily regulated organisations on the planet, so they can’t afford to be unpredictable. Every update to a digital service has to pass rigorous checks and balances; whether that’s a new feature or just an update to a single line of code.

A further challenge when adopting DevOps is that banks’ organisational structures are designed to handle large projects rather than short sprints. DevOps calls for more emphasis on the latter, yet the IT teams within most banks aren’t structured in a way that allows them to adopt short sprints naturally. Making the organisational changes that are needed to overcome this challenge is one of the most painful things that banks will ever have to go through.

Overcoming resistance to change

Despite concerns many banks have over the speed that DevOps introduces, it can actually make it easier to remain compliant with regulation if implemented effectively. Automation is a cornerstone of DevOps, so consistency and reliability can be baked-in as workflows become standardised and repeatable. Automation can also be combined with developer-supported diagnosis, allowing banks to roll-back changes instantly if something goes wrong; greatly reducing the risk they will fall foul of regulators.

Solving the structural challenge is a little less straightforward. Large IT teams must first be broken-down into smaller groups to maximise the efficiency of DevOps workflows. Jeff Bezos defined a ‘two pizza rule’ that has become a recognised best practice for DevOps implementations. The idea is that if two pizzas aren’t enough to feed everyone on the team, there are too many people involved for it to be productive.

Once their teams have been resized, banks need to remove the constraints that have traditionally made them a bottleneck to innovation, or the benefits of DevOps can never be fully realised. It’s impossible for banks to run fast enough to outpace their fintech rivals if every digital project has to be delivered solely by the IT department. To enable greater collaboration, the teams creating new functionality and unlocking data sources need the ability to share those assets with wider teams in the bank as quickly as they’re being built.

Banking on APIs for success

Removing constraints on innovation can best be achieved through an API strategy that makes it easier for teams to discover and reuse the assets being created by DevOps teams. This approach creates pre-packaged building blocks that can be combined quickly into new digital banking services. That in turn encourages experimentation, supported by the fail-fast mantra at the heart of DevOps. If one new innovation doesn’t work; simply unplug it and try something different. As a result, innovation can become truly industrialised within the bank, driven collectively by the entire organisation rather than resting solely on the shoulders of IT.

However, to maintain integrity as the pace of DevOps brings an increasing number of quickly connected assets, it’s crucial to have orchestration and security built into the process alongside automation. API-led connectivity again holds the key to this, allowing banks to compose their assets into an application network that has security baked-in and provides unhindered visibility into the way that things connect, in contrast to the chaos of point-to-point connections. As an added benefit, an application network can also support a multi-speed organisational structure. That means that areas of the bank that don’t need to innovate quickly can be uncoupled from DevOps workflows to follow their own operating model without being a roadblock to others.

This blend of DevOps and APIs is the perfect recipe for success as incumbent financial services providers look to retain their edge over newer, digital-born fintech startups. As well as supporting the speed that DevOps inevitably brings, the enablement of reuse by API-led connectivity also helps to maintain the stability and consistency that banks need to stay on the right side of regulators and innovate within the increasingly strict guidelines they must adhere to. Ultimately, if they can strike that balance right, then traditional banks will face a much brighter future than many might have recently feared.