Mitigating Risk when Building Software for Financial Services Companies

Financial services companies’ core business isn’t technology disruption. Still, that hasn’t stopped the C-Suite from asking for innovation — fast. So how do you meet expectations when, at the outset, you’re not set up to succeed?

TWG has worked with leading financial institutions to design and build software using Agile methodologies. The results have proven both sound as well as cost effective. But it’s not an easy road to travel for organizations steeped in tradition and mounting compliance pressures.

(Thomson Reuters Cost of Compliance Report 2017).

With fines, regulatory constraints, legal action and reputational issues on the line, it’s extremely challenging to break out of the rigid, sequential model of software development — something that’s required so that financial institutions can improve their solutioning speed, maximize the dollars they have to spend on innovation, and ultimately bring the right product to market. For some, Agile methods on long-term, multimillion-dollar projects feel both risky and impractical.

While it dominates conversation in tech circles Agile is not suitable for every project. For example, a full replatform of critical systems requires a more intentional approach, leveraging traditional business analysis and other heavily documented methodology. Yet from TWG’s experience, there are significant use cases in finance that are overlooked for Agile implementation. Where uncertainty is high in feature definition for new products, financial services companies can cut their spend on product development simply because of improved processes – whether the product in question is consumer facing, platform architecture or internal tooling. By embracing the uncertainty with an Agile mindset, and reducing wasted effort and costly overhead, they can significantly increase their ability to deliver high-value, high-impact projects on time.

“Failure”, or stress testing a product during the build process to see where the potential problems lie, is deliberate and designed to mitigate risk of product failure in the end. In taking this approach, the team can both surface and resolve product risks in a progressive fashion as opposed to running into a brick wall at the end of the production process because regulatory, security or other business constraints weren’t properly identified and managed along the way.

No matter what the barrier, what’s required to get to the right solution is trust, flexibility and a foolproof process.

Five Best Practices: What it takes to succeed in implementing Agile in a complex, regulated environment

To use agile successfully on complex regulatory projects, organizations need to pay particular attention to five best practices. This approach can help companies to vault ahead of their competitors, meet the expectations of the C-Suite and improve the effectiveness of their approach,all while saving money in the process.

Build a small core team and bring in unbiased help from the outside. When planning for and implementing projects, many organizations make the mistake of including everyone on the team — folks from business units who aren’t needed on a regular basis. This bogs down the process and diminishes the team’s focus. They also don’t cast the net outside their own organization. Instead, a small, but fully dedicated core group of experts supported by an external product development team, can work much more effectively by drawing on the right resources when needed.

Prioritize. According to the Thomson Reuters Cost of Compliance Report 2017, over the past five years, the number of new regulatory requirements has tripled globally. It’s easy to be distracted by this constantly evolving environment, so companies must prioritize the top items in the backlog. By doing so, they can quickly build an end-to-end plan for incremental delivery and can determine the features that are essential to meet regulatory requirements, generate substantial project savings and mitigate risk.

Go bite-sized. Teams should break down regulatory requirements into clearly defined, manageable chunks that can be delivered independently. Iterating means they can continually deliver key portions of the project rather than attempting to deliver the entire thing all at once.

Transparency = Trust. Serious mistakes on projects with regulatory backdrops can have tremendously negative consequences. That’s why building a culture of trust and transparency is extremely important both internally and with your product development partner. This process starts with trust among the team members, who may be accustomed to managing a discrete portion of a project and now must work collaboratively to resolve challenges, bypass roadblocks, and take responsibility for the entire project. It also requires trust across business units that up until now have likely been siloed. Teams need to find their rhythm of collaboration knowing they are heading towards the same goal without fear that other units will pass the buck. Developing a series of shared goals is also helpful, to ensure that everyone is moving in the same direction.

Reconnect with your customers. Validating concepts with end-users early and often and bringing customers into the service design process not only ensures success but also creates advocacy for future innovation. While financial services organizations are secure institutions by necessity and design, security should not come at the expense of innovation and customer experience.

Alignment can move mountains and improve business outcomes

Ensuring everyone is aligned, leveraging validation strategies early and often, and building a solid, agreed-upon approach in collaboration is crucial. A project may not move quite as quickly as one involving a start-up that wants to shift consumer behaviour by challenging the status quo, but TWG has been able to transform the agile development process within enterprise financial institutions and create trust at each step in the journey.

While start-ups are good at pushing the regulatory line and regularly experiment with how much disruption the sector can handle, the advantage for traditional enterprise organizations is they have three things that matter most: the brand trust, the opportunity, and the resources to move the line entirely. Add Agile product development to the mix, and things become not only game-changing, but also add incredible competitive advantage in one of the most rapidly shifting sectors today.