For financial institutions, technology is changing the entire world order. Best practices and the way things have been done for years – from payment processing to asset and risk management and online banking – are changing rapidly, and customer expectations are at an all-time high.
To meet these expectations, financial service companies are increasingly shifting to an agile mindset. Agile, which at its core breaks down large projects and services into smaller parts that can be completed in a short timeframe, allows organizations to look beyond hierarchal structures, increase the rate at which decisions are made, and adapt to customer needs in the digital era.
However, the path to agility can be rocky, requiring technological, cultural and behavioral shifts. Here are a few key challenges your financial services business will need to overcome to become a truly agile, adaptive organization:
1. Top-down leadership
For an agile model to fully transform an enterprise, it should be adopted by leaders at every level across an organization. However, the biggest hurdle I’ve seen when coaching leaders through the process of transformation is attitude. To be agile means to distribute power, and the traditional hierarchal business model is still deeply rooted in the financial industry.
To lead a successful transformation, leaders need to think outside of their traditional roles and titles with the goal of implementing empowered teams. What does this look like when put into practice?
As a coach, my first goal is to identify how high up in the organization the commitment to transformation goes. If an organization can get all the vice presidents on board, it has a better chance at succeeding because it has the needed authority behind it. According to Scrum Alliance’s State of Scrum Report, active senior management sponsorship and support is the number-one motivator to undertake an agile transformation. From there, it’s the VPs’ job to embrace the new business model, remove bureaucratic boundaries from the top down, and distribute that power across the entire organization.
I’ve rolled out the Scrum process at many financial teams, and the most surprising concept for teams to adjust to is how leadership can extend beyond the C-Suite into the rest of the organization. Within the Scrum method, every role is valuable and leads progress in some way, whether you’re a scrum master, a product owner, or part of the development team.
2. Complex, lengthy decision-making
The financial services world is conservative by nature. Management decisions are often made through long, extended processes involving numerous channels and multiple people contributing via presentations, in-person meetings, and ad hoc emails. This creates a loss of accountability and contributes to risk-aversion, which slows the decision-making process.
We understand that finance has compliance requirements and there are good reasons to make decisions carefully. But that doesn’t mean there should be redundancies. The agile framework presents a unique opportunity to improve collaboration and streamline the development of solutions that ultimately reduce inefficiencies and overall costs.
Scrum teams are designed to be small and cross-functional. This allows for all individuals to have functional authority and decision-making power to move projects and services forward. These teams work closely together using a well-defined method to make smart decisions and build progress quickly.
When financial organizations adopt a true agile mindset, they have the ability to spot and address a problem as soon as it appears, analyze the possible outcomes, and implement an actionable solution that can be applied quickly, without the approval processes typically found in a hierarchal structure.
3. IT in a silo
A bank’s focus is money, and leaders may sometimes lose sight of the importance of effective IT operations. But in the digital era, the purpose of a transformation is to adapt to the customer, not to the institution.
As we all know, IT issues can disrupt customer service and incur costs to the business. But breaking down systematic barriers within their IT operations can streamline processes and ultimately help banks improve business and make more money.
If you’re able to instill an agile mindset in your financial organization, you’ll drive innovation, identify opportunities for growth, and streamline services to support customers and your bottom line. Financial services organizations on the path to becoming truly agile should consider the belief that everyone is a VP, emphasize the importance of decision-making, and ensure that effective IT operations are in place to drive the business forward.
[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]
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