Why Agile Is Extremely Essential for Banking?
Table of Content
1. Introduction
3. Top 5 Reasons Behind Agile Being Extremely Essential for Banking Sector
3.1 Drives Speed in Innovation
3.2 Develops Flexibility for Financial Institutions
3.3 Increases Efficiency in Financial Services
3.4 Boosts Teamwork
4. Conclusion
Digital transformation has been a huge part of every business and industry, but it is now just about presenting clients with online services. Real transformation is something that happens from the inside. And this is the case with financial institutions that try to adopt the agile approach and give up their traditional methods. With agile transformation, they can then focus on development and not just accommodating the clients. With agile development, banks can easily process the requirements of their customers and can make change an integral part of their service-providing technique. To know more about agile development methodology and why it is essential for banking, let us go through this blog.
2. What is Agile Development?
An agile approach to product and software development came into existence from the 2001 Agile Manifesto. The agile concept is used to represent responsiveness and adaptiveness. The software development with Agile involves cross-functional teams, self-organizing, and collaborative app development with innovative solutions while providing a shorter time to market. When we talk about agile methodology, there are multiple principles and implementations and some of them are the involvement of the Scrum team and the Kanban method.
Kanban is a very useful methodology for businesses when it comes to digital transformation. It enables you to make changes while using an existing workflow. The agile method performs on continuous flow, constantly deploying upgrades, and new products without waiting for anything.
Scrum teams always use the agile methodology because it can help in boosting productivity and offer efficiency. Besides, it includes a scrum master and other additional members of the team. When the team is smaller, it can easily boost teamwork without any issues when it comes to allowing for multiple perspectives. And this scrum team consists of a User Experience Designer, Engineering Manager, Development Operations Providers, and Quality Analyst in addition to a program manager or scrum master or program manager.
Besides this, when it comes to larger and more time-consuming products, agile is a framework that uses ‘epics’ which can easily break down the product into different user stories. Epics are something that can help all types of businesses offer constant updates and services to customers as part of a great work scale. Besides this, the teams involved in agile development work in tandem across multiple boards.
3. Top Reasons Behind Agile Being Extremely Essential for Banking Sector
When it comes to the banking sector, it is a known fact that it undergoes a revolution across all fronts. With the change in technology, the traditional banks have given way to digital-only banking functionalities that have gained the attention of millions of customers in very little time.
As per a survey, in just the last five years, around 7,500 US bank branches have shuttered their doors. The main reason behind it is that digital banking has become more popular and its demand has increased. So now, financial institutions are either accepting the quick changes that are taking place in the industries or risk falling behind. To know more, let us go through the reasons behind adopting an agile approach in order to boost the digital transformation process in the banking sector.
3.1 Drives Speed in Innovation
When any financial institute adopts the agile framework of development it often leads to an increase in consistency in innovation which leads to the development of new solutions as per the customer requirements. For example, with the increasing use of smartphones, people now use their phones to conduct any transaction or avail any banking service instead of visiting the branch.
As per a Fintech Market Report by S&P Global in 2018, majority of the smartphone users make use of their devices to pay at a retail store. By seeing such a growth in the usage of mobile phones and new & innovative applications coming into the market to make users work easier, Fintechs and traditional banks are now offering tailored mobile banking services. This offers various benefits to their customers from this changing trend.
Besides this, finance companies that use an agile approach can capitalize on offering innovative services quicker. And when there are some challenges, the software development teams and agile products can work together to find innovative and useful solutions that address the new customer requirements.
3.2 Develops Flexibility for Financial Institutions
Agile development is an approach that takes into account a rapidly evolving and changing industry like finance. This enables flexibility. Besides, with digital disruption, there are many changes in the regulations that take place and this means that both the old players and new entrants in the financial services providers market must have the capability to rework their products and services as per the requirements.
When these financial service providers adopt an agile framework, they can easily reduce the time that goes between releasing new services as per the customers’ requirements. As per a survey by Cprime, 90% of companies have improved their ability to handle changing priorities with the help of an agile approach. Besides this, agile development also provides continuous delivery that enables businesses to constantly come up with new and innovative services.
It is said that the financial sector has been one of the last industries to stand against the revolution of the digital era. But still, the majority of the fintech startups across the globe have proved themselves by offering customers easier ways to manage their finances. Therefore, by following agile development, the agile teams can easily validate their prototypes and models, and can efficiently incorporate any changes that can help in upgrading their services.
3.3 Increases Efficiency in Financial Services
When the banking sectors use agile product development methods, they can get the benefit of constant integration and a consistent delivery & deployment system. This clearly means that the financial institutes can use a central system to share their work progress and enable errors to be caught faster. As per a survey by Cprime, all the agile products have 93% fewer defects. This enables teams to save time.
In addition to this, catching errors with the help of an agile approach can be extremely cost-efficient in the long run. This approach for product development can be very useful especially when banks want to test their prototypes internally.
Besides this, agile development is also beneficial when it comes to increasing return-on-investment (ROI) as the services and products are created and released faster than businesses that follow the waterfall approach. Basically, all these things prove that fintech is booming, and by adopting agile development, legacy financial institutes can easily execute their digital transformation.
3.4 Boosts Teamwork
Agile methodology replicates the startup culture in such a way that it seems that it needs multiple scrum teams to create a product. This approach enables in increasing the creativity of the software development team members to work cross-functionally and gain invaluable perspectives from each other.
Traditional banks were following an outdated way of working like a silo mentality and adhering to hierarchical systems, are now trying to update themselves by integrating the agile methodologies.
So the fintechs that have adopted the agile approach can now easily create a dedicated team for product growth, project management, innovative solutions, research, and development. This new agile team can work together to develop new and innovative solutions. They can also offer products that require a shorter time to market. This enables teams to work as a unit and create holistic solutions while offering new innovations.
4. Conclusion
As seen in this blog, customers are generally drawn towards products that offer accessibility, flexibility, and innovation. This is why legacy players have to change their ways of creating or offering services. For instance, now the majority of the people prefer to make payments using mobile apps than visiting banks. Therefore, they go with the banks that offer such services, and the ones that do not offer such innovative functionalities lack behind.
Therefore, traditional players in finance must adopt agile methods. This approach can allow them to fulfill complex customer requirements with ease. Besides, an agile approach can offer a smoother transition to the legacy banking sectors which enables them to compete with digital challenger banks. Basically, agile transformation can be the perfect choice for banks that want to offer the best financial services and great customer experience.
