Increasing innovation in financial services with lean and agile

Today, organisations of all sizes across the financial services ecosystem are increasingly looking at ways to streamline their development and delivery of solutions, as well as accelerate innovation and time-to-market. Two significant areas of investment
that are driving success in this endeavour are, of course, lean and agile.

To help firms with their adoption and implementation of lean and agile tools, technologies and best practices, here’s four key tips to consider.

1. Create an agile and iterative culture

If there is one thing the last year has shown emphatically, it is that significant upheaval can happen at a moment’s notice. How organisations respond to this change is increasingly the litmus test of business resilience.  

Reacting at pace to changes in the technology landscape, financial services ecosystem, and to the requirements of customers, is essential today, but this is simply not possible when working under a traditional waterfall approach to software development.

To enable a more agile approach, organisations must seek to adopt a new culture that prioritises the elimination of waste across the software development lifecycle and reorganises teams around agility and cross-functional capabilities. Technology adoption
is of course key, but a culture that fosters agility to drive business objectives, resilience, and success is essential.

By responding to change and meeting the demands of customers at pace, financial firms will also keep in step with their more agile competition. Increased agility and an iterative model of development and delivery allows organisations to test solutions with
customers, release beta products or features, and increase their innovative potential. By testing with trusted customers, potential issues can also be identified before they are released at scale, eliminating the risk of customer dissatisfaction.

Under this model, minimum viable products (MVPs) can be released into the customer environment, providing immediate value. These solutions can then be continuously iterated in line with feedback, which is increasingly becoming the standard model of delivery.

2. Drive agility at scale through platforms

Cloud infrastructure has been essential in driving innovation at scale and pace in financial services and is crucial to digital transformation roadmaps. Transformation necessitates the reorganisation of teams and a shift in culture to address business problems,
while at the same time maintaining workflows that ensure delivery of services.

A key challenge for many financial services organisations is how to achieve this while updating legacy core systems in parallel. APIs and the rise of platforms are increasingly helping organisations to overcome this problem, allowing them to decouple applications
from legacy products and deliver them as targeted microservices. An increasingly attractive pathway to follow is the third-party platform approach, in which a bank, fintech or ISV adopts a software development platform that enables its developers to build
and deploy these applications seamlessly through advanced automated workflows that span the entire software development lifecycle. 

3. Prioritise agility over ownership

What matters most today is maintaining the ability to deliver the services that customers need. The pressure to increase investment in digital channels has been gathering pace for some time, particularly following the sea change brought about by innovative
data-sharing regulations and initiatives, such as Open Banking and Open Finance. These factors, combined with customer expectations, has led to the increasingly competitive and robust fintech ecosystem that exists today.

For incumbents, digital transformation is unlikely to occur at the pace of more agile competitors, as upgrading and replacing legacy infrastructure is a gradual process. Collaborating with fintechs to build out capabilities in certain areas is therefore
a must.

For fintechs, who need access to the banks’ extensive data to enable certain use cases, collaboration is also essential. Furthermore, FIs that offer ‘Banking-as-a-Service’ can also provide them with the capabilities their own customers require. For both
parties, it’s no longer a case of “build vs buy” but rather “deliver later vs deliver now.” In every case, customers prefer the latter.

4. Ensure agile technology infrastructure  

Technology is, of course, a key driver of innovation and an enabler of agility. The use of open APIs and the rise of platforms are bringing about a revolution in financial services. Open Banking has also increased the demand for data-sharing capabilities,
creating compelling new use cases for innovation across industry verticals, from payments to treasury and cash management, to capital markets, commercial insurance, and health insurance. Increasingly, incumbents are opening up their infrastructures to fintechs
and developers through the use of open APIs via platforms, allowing them to innovate solutions that serve their customers.

An area where data-sharing is increasingly paying dividends is machine learning. Models that can surface new data points and leverage alternative data sources are instrumental in enriching and creating new use cases across financial services. The more data
that exists, and that can be put into machine-readable formats, the better the solutions that can be built.

Another area driving agility is the ascendancy and continued evolution of DevOps tools and platforms. Major cloud service providers, such as Microsoft Azure and Amazon Web Services, offer advanced DevOps capabilities that are able to manage and automate
the entire application lifecycle, allowing firms to deliver applications and services at pace, without the need to architect their own platforms.

In some sense, agility can be enabled by technology adoption, but effective implementation is essential. Ensuring an agile culture is in place, as well as the expertise to make the most of emerging technologies, are the two most important factors when it
comes to technology adoption. 

 

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