Agile Adoption in the Financial Services Industry

Matthew Wood, Head of Payments Strategy, Westpac Group

Matthew Wood, Head of Payments Strategy, Westpac Group

The banking sector is experiencing rapid transformation. Advancing technology capabilities, changing customer preferences and deregulation are opening the door for new entrants and the level of competition amongst incumbents has never been greater. This has prompted many financial services organizations to explore new methods of implementing customer-facing technology to support more rapid adaptation to changing customer preferences. This, in turn, has spurred the mainstream adoption of agile software development methodologies (agile) across the sector, although the use of agile varies greatly from organization to organization. This has created challenges for organizations seeking to ‘adopt’ agile.

There is no ‘Playbook’ for going Agile

Banks are increasingly placing value on the speed-to-market of new capabilities. Agile is seen as a way of increasing both productivity and project effectiveness, but agile has an inherent ‘fuzziness’: it is multi-faceted. It deals with project management, internal ways of working, software development, productivity and problem solving all at once. It is subject to personal and contextual interpretation. This presents challenges for banks with structured roles, decision-making hierarchies, processes, and procedures - for agile is as much about culture as it is about process. With agile, multi-disciplined self-directing teams that are co-located all work together in relatively small units focused around product features. This is a drastic shift for banks that have traditionally had functionally aligned teams working on plan-driven tasks determined by management through command-and-control decision making structures.

Banks are Unique

Banks are large, complex organizations. They are typically highly distributed, with both outsourcing and off shoring being commonplace. They are highly regulated organizations with extremely stringent operating requirements. They typically have highly centralized, hierarchical structures with ‘command and control’ management arrangements. As they have grown in size, they have become ever more complex as the array of technologies has increased.

A typical bank has IT services delivered by a portfolio of interdependent applications which are, in turn, delivered by multiple co-dependent IT service providers (ISP).

A typical software development project probably needs to be coordinated between hundreds of development staff across multiple ISP’s and geographies. The challenges associated with effecting cross-functional collaboration between teams in this environment are obvious. Where multiple scrums co-develop a particular application, a high degree of collaboration between the scrum teams is needed. However, I would argue that the very nature of scrum teams limits their ability to collaborate. They have a multidisciplinary setup focused on velocity of delivery, and are concerned with a narrow product backlog rather than the big picture.

Poor collaboration results in a lack of transparency, that is alignment of priorities and the unpredictability of delivery across teams: a recipe for disaster for a typical bank.

Agile Requires Different Skills

Banks need their project delivery resources to possess different skills due to differences between agile methods and the traditional planned software development methodologies.

“Banks need their project delivery resources to possess different skills due to differences between agile methods and the traditional planned software development methodologies”

It is critical that agile teams are empowered to make decisions. This means that the role of the project manager (PM) needs to be turned on its head. Rather than a command-and-control role, far greater facilitation skills are needed. The PM needs to play the role of ‘devil’s advocate’ in the decision-making process, and have the ability to empower a team to quickly deliver value to customers. Agile project managers must be able to provide a broad vision of what is required to their teams, and let the teams decide how to execute. They must play a bridging role between teams, be flexible, and have the ability to think on their feet. They need to focus on building and maintain relationships with sponsors who otherwise may feel disempowered as a consequence of being ‘out of the loop’. Providing transparency and establishing trust is key. This requires a high degree of emotional intelligence, commercial acumen and political awareness.

The role of the agile coach is also critical to success in agile-effective agile coaching is of such importance to the sustainability of agile methods. Agile coaches play a crucial role in not only supporting the adoption of agile across the organization, but also in improving agile practices over time. They become agents for change, fostering communities to facilitate the sharing of ideas, best practices, and lessons-learned.

Don’t Just Focus on Adopting Agile—Focus on Sustaining it.

While continual improvement and learning are at the core of the agile philosophy, banks are not environments suitable for experimentation. Significant organizational changes are required to effect an agile transformation. This requires significant levels of planning. An agile transformation will fail if the focus is solely on agile adoption. It is critical to ensure that any agile transformation can be sustained on an ongoing basis. For banks, this means recognizing that changes are required across the entire organization, including the dynamics of teams and roles. Getting the right mix of skills in key project management and agile coaching roles are critical to that continued success.

Founded in 1817, Westpac provides a broad range of banking and financial services including retail, business, and institutional banking. It is headquartered in NSW, Australia and also has offices in key financial centers around the world including London, New York, Hong Kong, and Singapore.