Agile- processes, methods, teams, structures, thinking, management.

The Buzzword “agile” is in everyone’s mouth and slowly starts to become more significant in all industries and areas, but why?

Agile Banking

Challenges for Banks: Regulations, cryptocurrency, tied resources and economic framework conditions – skip those hurdles through agility.

Problem-sources Solved by Agility:

When working with classical methods, problems arise that are prevented by an agile approach, or do not even occur. Long decision-making processes and decision durations, rigid structures and the fear of failure are exemplary sources of problems, that are greatly improved or even eliminated through agility.

Agility promises not only flexibility, but also an increase in speed and efficiency. Responsiveness to changes, continuous product improvements and active involvement of employees in decision-making, are just a few of the advantages. The banking sector is increasingly recognizing agile approaches to their work.

Shorter innovation cycles are literally crying out for uninterrupted development through agile processes. Another pluspoint of agile methods is, that employees who are given a sense of appreciation through active involvement in decision-making processes are more motivated to assume responsibility.

Why Agility in Banks:

External factors, such as the growing number of social networks, low interest rate policies and government regulations, have led to pessimists like Thomas Mayer announcing: “the downfall of the classic banks”.
Crowd-funding and crypto-currencies are not only alternatives but strong competitors for traditional banks. Start-ups in the financial sector, so-called “fintech start-ups” advertise with increased efficiency, speed and innovation while at the same time responding precisely to customer wishes.

Traditional banks are increasingly regarded as obsolete by customers.
In the 2018 Crealogix bank customer survey, the most important banking services were identified and compared with how these are utilised by users. More than 90% of Austrians stated that they transfer money online. The following chart shows that more is already conducted online in all service areas than in the local branches. This trend towards digitisation is one of the many reasons why more agile methods are needed in the financial sector today.

bank-services

Copyright CREALOGIX AG – Excerpt from the Bank Customer Survey Austria 2018 | Open Banking – the Potential of the Bank of the Future

The BankĀ“s Challenge:

Banks, like all other companies, face certain challenges when it comes to the implementation of agile structures. The first is self-awareness; position and specialization must be clearly defined. The wishes of the proprietors and shareholders must also be taken into account. In addition to reputational risk, other factors must be clarified, and a uniform and clear mission statement based on agility must be communicated to all employees and internalized by them.

A further challenge for banks is confronted by the legacy infrastructure which dominates the financial sector: established and well-tried IT systems, which have been adapted to the company and its needs over many years, do not support the new agile methods. Switching to new, more adaptive software can be costly, but will save a lot of money and effort in the long run.

Long decision paths mean that responsibilities are being shifted to the highest authority, and employees are afraid to embrace responsibility. Regulations, equity and tied resources make it difficult to become an agile bank in addition to difficult economic conditions such as low interest rates, defaults and loans.

But how can all these hurdles be overcome?

ING DiBa – Pioneer in Agile Banking:

In March 2018, ING-DiBa was the first bank in Austria to introduce agile working structures on all levels. The breakdown into squads (multi-disciplinary small groups of approximately 7 employees acting autonomously and end-to-end) and tribes (several squads pursuing a common goal) streamline the company’s processes. So-called “Centers of Expertise” bundle expertise and know-how by thematical areas. In addition, agile coaches are available to the squads, which further increases efficiency and speed.

Three goals were defined before the introduction of the agile structures of ING- DiBa:

  • More Attentiveness to Customers:

    Adapting products and services to rapidly changing customer needs

  • Speed and Efficiency

    Faster time-to-market, value enhancement and continuous improvement

  • Stronger Together:

    More autonomy, greater personal responsibility and growing commitment

As a result, ING DiBa was recognized by the “Great Place to Work Institute” as one of Austria’s top employers.

“The transformation into Austria’s first agile bank was a milestone. The award as ‘Great Place to Work’ encourages us to continue to break new ground. We want to enable our employees to drive ING forward in Austria on their own initiative and to contribute their individual skills and ideas,”says HR Manager Gabriele Bachowsky.

Agile Banking – But How?

BANKING HUB explains how 4 core elements make agile banking possible:

  • Consistent Customer Orientation

    Everything, from products to services, must be aligned with the customer’s needs. In order to discover what customers really want, personal conversations are essential. However, these should not only take place sporadically, but continuously. The needs that have been identified and the resulting findings must ultimately be implemented as quickly as possible.

  • Flexible Structures with a High Degree of Personal Responsibility

    Flexible structures with a high degree of individual responsibility on the part of all individual employees are required to ensure that the findings are implemented immediately. Self-organized, interdisciplinary teams that work in short and intensive project phases accelerate processes. Efficiency is increased by eliminating bureaucratic processes and by the decision-making of the teams themselves. “It is about the controlled change from organized irresponsibility to unorganized responsibility”.

  • New Mindset

    By changing the sense of responsibility, a new mindset is created. Personal responsibility and independence create commitment and enthusiasm for collaboration as additional factors. Through solution-oriented and joint work on goals, employees are motivated and their productivity increases.

  • Creating Meaning

    By dissolving rigid structures, eliminating lengthy coordination processes and decision templates, all work processes become sensible. Relevant content is found in work, and people who are looking for meaning in what they do are addressed. Consequently, not only orders are executed, but purposeful activities are pursued which lead to timely results.

Step By Step – the Path to an Agile Bank

There are several ways to become more agile, for example one can start small with an “innovation laboratory” which is used as a test run. Unfortunately, this approach often fails because only a fraction of the company is involved.

A second option would be a Double Operating System, where digitalization and automation are introduced parallel to the classical system. The aim here is for the agile part to grow and replace the classic working methods. Unfortunately, this approach often leads to internal competition between the different departments.

According to bankinghub.de the best option for the introduction of Agile Bank is “agile but careful”. This makes the bank gradually more agile, i.e. agile structures are applied during the implementation. Step-by-step changes are introduced, which are gradually improved. The resulting involvement and co-responsibility of the employees motivates them to work in a solution-oriented fashion, which quickly shows success.