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How an agile framework can help financial organisations to overcome digital transformation challenges

iStock 1404804897 - Global Banking | Finance

410. - Global Banking | FinanceBy Khadim Batti, Co-founder and CEO at Whatfix

It is the era of digital transformation. Amplified  through the extreme digitalisation caused by the pandemic, and in a time where 93% of people use internet banking UK-wide, 30% of men and 24% of women have a digital-only bank account, and a staggering 83% of SMEs in the UK use online banking, financial services have had to digitise.

But while advanced technological solutions offer better speed, reliance and cost when it comes to meeting customer demands and delivering on productivity in today’s fast-paced, digital-first world, not everyone is successful in moving away from outdated legacy systems and upgrading processes. According to Everest Group as many as 78% of enterprises today fail to scale their digital transformation initiatives and achieve the desired return on their digital investments.

The challenges of digital transformation

Transforming digitally is not just about the adoption of new software applications, technologies and automation – it also entails an entirely new way of doing things and leaving the comfort zone of business-as-usual. Indeed, per Everest Group, the blame for failed digital transformation often falls onto a misalignment between an enterprise’s digital strategy and its “old school” operating model. And according to McKinsey, 70% of all digital transformation programmes fail due to employee resistance and lack of support from management, and only 16% of employees said that their company’s digital transformation efforts improve their performance or are sustainable.

Moving away from legacy technology can also be challenging. Nearly 50% of banks have not upgraded their outdated IT systems according to the UK’s Financial Conduct Authority, while Reuters found that about 43% of banks in the US are still using a programming language COBOL that pre-dates the internet.

Scaling successfully and securely – a key consideration for financial services undergoing digitalisation programmes – can also prove to be a stumbling block for transformation. Adopting new technologies can prove challenging at scale, particularly when there are tens or even thousands of end users who need to upgrade to new applications under stringent security and compliance regulations.

In order to overcome these challenges and implement a successful digital adoption strategy, financial organisations can turn to an agile methodology – a test-and-learn process that prioritises incremental, iterative development, collaboration, cross-functioning teams, and quality over rules – which helps them to get their transformation right.

The core principles of agile

In basic terms, an agile digital transformation means a move to digital that is achieved through continuous innovation and development. Rather than rushing headfirst into a transformation project without the right tools, best practices and technical maturity, an agile approach enables financial organisations to ‘grow into’ their new digital shell over a dynamic, flexible and ongoing process.

There are a handful of core principles to consider with an agile approach:

  • Agile is adaptive – rather than adhering to an inflexible plan, responding to change as it arises is an essential element of this method that prioritises continuous improvement.
  • Collaboration is key – agile is managed and controlled by the team at all levels, rather than following a top-down strategy, and individuals and interactions are superior to protocol.
  • Fluid reporting – under an agile approach, a digital transformation is periodically assessed and reviewed by the team in contrast to undergoing metric evaluation, and ensuring the software and technology functions correctly is more important than extensive record keeping.
  • Customers/end-users come first – agile is evaluated on whether or not the final product satisfies the end-user and is where customer collaboration takes priority over contracts and highly mechanised and standardised procedures.

Utilising these interactive, time-boxed principles encourages teams to practise newly learned skills, and in an approach that segments an enormous task of digital transformation into shorter, manageable steps, employees are continuously learning. This approach also tends to result in smaller financial investments as typically the mistakes are fewer because teams have the chance to learn from their failures before moving on to the next phase. Additionally, as customers are at the heart of this approach, their needs can be included into any deliberations and projects can start to deliver value before the transformation is even finalised. Finally, since security is continuously monitored, any concerns are addressed and mitigated at each stage, ensuring ongoing compliance.

Indeed, when done well, an agile method can be hugely beneficial to financial organisations, with research finding that agile projects are 28% more successful than traditional projects and that agile businesses see 60% more profit than companies that use a more traditional transformation strategy. In addition, more than three-thirds of marketing leaders said they became significantly more productive after embracing the agile approach. It’s no surprise, then, that at least 95% of organisations already practise agile development methods.

But how can financial organisations make the most of agile, and where do they start on their agile journey?

Four tips for adopting an agile digital transformation approach

The following four tips will help in adopting an agile digital transformation strategy, ensuring that the right people have been selected to drive the process and, importantly, to achieve the overall objective.

  • Define the purpose and value proposition – start by outlining why a business transformation is required. Understanding needs and requirements in this way will provide the necessary framework for the overall transformation.
  • Prioritise security – particularly in heavily regulated financial service institutions, security is a top priority, so including a security and compliance expert into the digital transformation team should be a priority.
  • Encourage collaboration – having proactive cross-department collaboration in place, beyond just feedback from the IT department, will not only ensure everyone is on the same page when it comes to the transformation, but will also enable you to collect and include collective feedback from everyone across the organisation, ensuring the transformation is fit for purpose across the board. Open communication is also key for facilitating a safe space for stakeholders to share anxieties and concerns.
  • Listen to employee concerns – it’s only normal that some employees might be in fear of digitalisation and losing their jobs. To address these concerns by creating a new lens for viewing change, the Prosci ADKA model might be the right framework. An industry standardised step-by-step approach that favours a results-focused change management, this model is based on the notion that any organisational change happens one person at a time.

If the task of digitally transforming sounds daunting, applying agile principles and strategies can help to form a plan that will enable you to start on the right foot, and take the time to ensure you get your transformation right, one step at a time.

Global Banking & Finance Review


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