Most of today’s banks are caught in a physical branch distribution model, making them vulnerable to technological disruption. Some financial organizations may not survive if they do not immediately and digitally adapt their business models. They might become laggards and cannot get back on track ever. Financial institutions like banks fear such a mishap and can turn all stones unturned to scale their operations and adopt a new-age methodology.
It’s crucial to remember that digital transformation doesn’t end with providing online banking or communicating with clients on social media. Instead, genuine change comes from reframing development such that it serves to adapt to the consumer rather than to strengthen the company.
What initiatives should financial institutions take to change their businesses? This procedure necessitates converting the entire business process into a fundamentally change-driven one. As a result, we arrive at the obvious solution: an agile methodology. Continue reading to find out the answer and learn more about Why Agile Is Now Essential for Banking?
The Push for More Agile Banking
Financial institutions have begun to use the same project management methods, and data flows used by software development businesses to stay competitive. Once learned, these strategies provide a slew of advantages, the most important of which is the lofty goal of achieving corporate objectives faster and better.
Agile development refers to the iterative process of producing and testing products rather than waiting for the project to be completed. This work approach presupposes that if issues or changes arise along the way, they can be addressed sooner rather than having to be rebuilt.
Agile principles enable businesses to pursue a transparent, data-driven methodology that allows them to test and learn continuously, unlike “waterfall development,” in which a completed product is provided before testing. By offering a minimal viable product (MVP) that can be quickly modified and fulfill consumers’ expectations, this strategy aids in reducing time to market. According to McKinsey, agile techniques can boost decision efficiency and product development speed by five times.
What is the New Digital Model, and Why is it Important?
Therefore, the question of why the agile operating model is pertinent to banking emerges. Addressing the solution is both easy and difficult. The primary cause is the industry’s rapid rate of change, which necessitates swift adjustments to banks’ operational procedures and goals. Additionally, the banking sector is rapidly digitizing, forcing many financial institutions to compete with just digital players. Adopting agile methodology streamlines organizational processes and increases front-line
Another advantage of being “agile” is that it reduces the risks connected with the digital component of your strategy, which is essential as banks continue to deal with new digital ways of conducting business. After experiencing significant and costly failures, banks have been attempting to “value ensure” the outcomes of massive IT programs for years. Planning everything before you start or laying down the content of a five-year project right from the beginning is challenging because the market and customer behavior are changing quickly. With an agile strategy, banks have the opportunity to address customer journey pain points in a tiny way and expand on these changes gradually.
Agile and the Innovation Mindset
Remember that an agile culture must be fostered throughout the entire organization, not just by one “innovation” team. With an emphasis on cross-functional collaboration, organizations can consider initiatives like hackathons, ideathons, and immersive learning experiences founded on the concept of failing quickly. It will help businesses stay ahead of the innovation curve.
The agile work approach is not just applicable to IT-related initiatives in the banking industry. Agile business methods, such as wealth management, customer experience, and marketing should be investigated by banks across the board.
The Meaning of Agile Banking & Its Characteristics
Agile concepts are still mostly unknown in the financial industry. Due to the prevalence of in-house designed systems, acquisitions and mergers, and an aging core platform, banks’ access to their data comes with challenges not experienced by many of their new tech competitors. The possibility to experiment with agile software development techniques will start opening up as the digital revolution progresses, and more and more legacy systems are replaced by new platforms created in more modern languages.
- Teams: Agile teams are groups of people who work together to complete tasks autonomously. They are responsible for a specific mission or business outcome. An agile development team, for instance, is a team of individuals collaborating to produce software while adhering to the concepts of cross-functionality and self-organization. Due to the changing nature of these teams’ goals, the mission and team makeup can alter along with them.
- These vivacious teams are supported by a robust governance framework, performance management standards, and empowering capabilities. Therefore, an agile-minded bank includes many high-performing, small groups, each with a specific objective they can complete from beginning to end.
- Agile organizations are more focused on the WHAT than the HOW: Teams are more cross-functional and less hierarchical, and product owners and tribe leads need to be much more experienced than entrepreneurs because they are fully responsible for instructing teams on HOW to achieve the results. At the same time, the WHAT is determined in collaboration with the top.
- Cultural shift: Organizational structure is only one aspect of agility; it also entails influencing the leaders and employees of the bank to change their hearts and minds. Everyone is welcome to share their ideas and opinions in this new culture, and everyone is invited to the table for collective problem-solving.
- Agile banks can think more quickly about the issues they must address, the opportunities they must seize, and how they develop and implement the solutions.
- Well-rounded: Finally, to truly define agile, you must consider five essential components: strategy, structure, people, process, and technology. Financial services businesses may become agile rather than merely “do” agile by tackling all of these areas.
Agile is one of the leading workflow approaches across industries worldwide. Agile has rapidly stepped out of the IT sector and taken over the finance market. Do you wish to learn more about agile for banking? Check out the Simplilearn online learning platform to find excellent courses now!