Read Part 1 Why is Scrum so Difficult for Banks and Insurance Companies? Here.

Read Part 2 Why Banks and Insurance companies Struggle Yet Strive for Agility Here.

In the final part of this series, we’ll cover how to actually execute these changes.

Change the Mindset

Culture change starts from the very top and requires the support of the CEO and executives. By support, I don’t just mean talking about it; I mean allocating funds, committing the best people, and, most importantly, once you’ve chosen the right people, don’t micromanage them! Give them the freedom to respond to unexpected market demands and technical challenges. Leaders should focus on setting the direction and boundaries, then delegate the rest.

Part of changing the culture involves transforming the team as well. Often, banks and insurance companies need to create entirely new teams, commonly known as Fintech, Digital, or Innovation Teams. The culture and working style of these teams are often very different from other teams, and sometimes companies may go as far as creating entirely new companies. During this process, it’s helpful to seek external assistance from consultants, startups, or people with a digital background. Some banks have even taken this to the extreme by preferring to hire new team members with no prior industry experience.

Lastly, change the incentive structure. People respond to bonuses. Traditionally, each team and department has its own agenda. It’s common to hear of local bank IT teams having a target of four releases per year. However, this often leads to the release of four superficial updates, without significant changes to the team structure or incentives, making true agility difficult. We want to align people to focus on the entire product or portfolio, emphasizing the team rather than individual or departmental goals. Many of my clients, in insurance and other industries, are going through a similar process. While the process can be painful, we don’t recommend an all-in, big-bang approach. Instead, try to change the organization incrementally and iteratively.

Change of Perspective

In large organizations, stakeholders often push to include as many features as possible, fearing that users will demand more and want to showcase their insights. However, this approach isn’t always the most productive or user-friendly. For example, banks often release apps to attract new customers to sign up and save money. If you add more steps for users to create an account, they’re more likely to give up halfway. The most user-friendly experience involves fewer clicks and ideally the shortest time to sign up for the app.

Regarding requirements, stakeholders must accept that they should always be changing in a world of high uncertainty. I’ve heard of cases where the Product Backlog at an insurance company remained unchanged for a year. They had it all planned out and just executed it. My first question is, why are you using Scrum then? You’d be better off going back to Waterfall.

Often, middle managers just execute without thinking. We want them to start with "why." Think about why you’re building this product. Have a common Product Goal. Reusing the bank app for new signups, maybe your goal should be to launch the app in three months instead of the usual two years. Or perhaps aim for 100,000 active users within six months. With a common goal, it’s much easier for cross-functional teams from different departments to work together. It’s even better to have an outcome-focused goal rather than just output, such as pushing out features or acquiring customers. For example, aim for $30 million in savings from new customers or $100 million in loans taken out through the app. And don’t forget to inspect and adapt your goals based on the latest situation. Just as requirements can change, so can Product or Portfolio Goals.

Change of Technology

Last but not least, executing agility requires more than just talking; you need to implement it with the latest technologies. First, adopt cloud computing. Cloud technology is nothing new; it’s been around for over 22 years (AWS was founded in 2002, and there were likely cloud services even earlier). Companies often complain, “You don’t understand, we’re in a heavily regulated industry, we can’t just move to the cloud, the regulators won’t approve it.” But there’s a virtual bank in Hong Kong with a full-stack cloud setup, and there have been no complaints from the regulators. So this is more an excuse for companies that are afraid of taking risks and making changes. I’m not asking you to do it all at once. Start with some public domain information, try using the public cloud, begin with a testing environment, adopt bit by bit, and later aim for a hybrid multi-cloud situation.

And please, adopt DevOps. Again, it’s nothing new; software engineering has been discussing it for over 60 years. Start by adopting Git (proven, reliable, and 19 years old already). I can’t believe how many clients are still using SVN/CVS and telling me Git is too new. Then, implement automated unit and integration testing, and consider automated UI testing. Once you have done that, you can build a CI/CD pipeline with ChatOps. These aren’t really modern technologies; they’re proven and reliable. It just takes time for developers to research what’s best for their situation, some money to adopt the tools, and the courage to take the initiative.

Lastly, outside of digital products, financial services institutions can use many automation technologies to streamline their processes and save manpower. These might be the low-hanging fruit that can bring significant benefits. For truly technology-advanced companies, AI can further enhance processes and fine-tune customer behavior. During the automation process, you might even identify problems and change the process. I heard of a case where an insurance company discovered that a process they had been following for 30 years was wrong and violated regulations after visualizing the process as part of an automation project.

Conclusion

In conclusion, transforming banks and insurance companies to embrace agility is no small feat. It requires a fundamental shift in mindset, culture, and technology. The journey is challenging, filled with obstacles like changing long-standing practices, rethinking team structures, and adopting new technologies. However, the rewards are significant—greater responsiveness to market demands, enhanced customer experiences, and a more resilient organization.

Start with small, incremental changes rather than a big-bang approach. Focus on aligning teams around common goals, embracing flexibility in requirements, and adopting proven technologies that can streamline processes and drive innovation. Remember, true agility is not just about the tools or processes—it’s about fostering a culture of continuous improvement, where teams are empowered to adapt and thrive in an ever-changing environment.

While the road may be difficult, the results of agility are worth it. With the right leadership, mindset, and commitment, banks and insurance companies can not only survive but excel in today’s fast-paced digital world.