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Financial Services Assessment & Optimization

Finding digital transformation in banking: Changing old ways of thinking to foster innovative financial solutions

11/02/2022

by Hayley Rabe

Banks have seen a lot of change in the past few years, but have they transformed their digital customer experience at an acceptable pace? After centuries of comfortability in their business model, disruptors like the Covid-19 pandemic, the rise of fintech, and generations raised with the expectation of technology, banks have realized the need to implement innovative financial solutions. However, preaching innovation is different from achieving innovation. No longer is “innovation” about just providing an online version of brick-and-mortar stores; rather it’s a complete digital transformation strategy to provide a seamless, hyper-personalized customer experience.

An Agile mindset and implementation can help put banks on the road to actualizing meaningful digital transformation. Essentially, by understanding and implementing the ideas of Agile, banks can operate more like a software development company by decreasing the time it takes to bring solutions to the market.

Foundations of the agile manifesto

What exactly is Agile? Essentially it is a way of working that started within the software industry, but can be applied to anything from utilities to parenting–and even banking. These are the four foundational beliefs of Agile:

• Individuals & interactions over processes & tools. This change in thinking reorients the understanding of where value is, and then aligns the project team in order to maximize that value. One of the ways that value is maximized is by quickly getting new functionality out into the marketplace, a practice that aligns with the Agile idea that good is better than perfect. This creates space for iterative development that incorporates consumer feedback. In banking specifically, there is a desire to leverage internal processes and tools instead of allowing various organizations–like technology, loan operations, branch operations–to collaborate. In reality, that collaboration should be fostered because it increases the speed of insights and actions.
• Working software over comprehensive documentation. This practice increases the speed to market for the most valuable items, but does not mean tossing regulatory requirements to the side. Rather, strategic and sustainable development is utilized to create a strong foundation that supports and shapes future development. Banks can have a tendency to emphasize formality. While formal practices, like internal committee reviews, can be beneficial, overreliance on these processes can drastically slow the speed of digital change.
• Customer collaboration over contract negotiation. Banks have an incredible wealth of data to understand customer needs. But most aren’t effectively using that data and have a large margin to improve. Shifting the innovation mindset to see customers as the main source of inspiration, and incorporating their feedback, will lead to successful and valuable solutions.
• Responding to change over following a plan. Keeping up with and partnering with fintech companies means that traditional banks need the ability to adapt. Customers are asking for more, and the sunk cost fallacy of “this is how we have always done it” isn’t going to cut it. Making this culture pivot will allow banks to appeal to a larger consumer base and develop the tools to support the generations that see banking differently.

Innovative financial solutions start with agility

Agile methodologies foster innovation from the inside out. The “symbiotic relationship among digital business models, customer experience, and efficiency” created by Agile work practices ultimately lead to exciting customer solutions, fulfilled employees, and sustainable growth.

What are the benefits of banks making the effort to become more Agile?

• Increased innovation at increased speeds. Each piece of customer functionality that can be created on a web or mobile experience (and prevents a disappointed customer call or visit to a branch) increases customer satisfaction.
• Flexibility and reduced reaction time. Agile accommodates rapid changes not only to customer preferences but also to digital, regulatory, environmental, and economic disruptions.
• Cost efficiency. In the long run, Agile is incredibly cost-effective, as it puts time and resources toward developing the most valuable technology features as quickly as possible.
• Teamwork. Developers are working on new exciting features that clearly have an impact on larger business objectives. They are able to push out of their queue at a faster rate and be open about bandwidth to keep the pace, rather than develop burnout.

An agile future for banking

Ultimately, customers have more and more options for how they bank. In response, banks must find a way to innovate. That innovation can start with easy first steps that allow for maximum benefits–to employees and customers. Adopting an Agile way of thinking and working is one of those easy steps that banks can take to focus on customer needs, improve employee morale, and increase the speed of technology development.

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Curious about what Agile can look like at your company? Contact us today and learn more.

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