Delivering Financial Services Faster & Better – Rahul Singh How BFSI Can Leverage Agile Transformation

We live in an era of instant gratification. Everything we need has to be delivered on demand –anytime, anywhere we want it. Financial services are no different. As Internet and smartphones increasingly facilitate real-time payments, fund transfers, settlements and other financial transactions, customer expectations from their banks, insurers and mutual funds continue to evolve rapidly.

…the conventional BFSI IT architecture will have to be reengineered for the
industry to effectively serve the needs of the millennial generation.

If a bank’s customers are not engaging with its latest app release, then it must harness user feedback to plug the gaps and roll out a revised, improved version at the earliest. If the mobile banking and Internet banking channels are currently displaying different customer data, then that bug has to be fixed quickly. And so on and so forth. A failure to effectively address customers’ queries, and act on their feedback, can lead to increased client churn and diminished brand reputation.

With disruptive trends such as consumerization, automation, Big Data and telematics fundamentally redefining the Banking, Financial Services and Insurance (BFSI) ecosystem, financial institutions must become more agile, responsive, efficient and innovative. BFSI companies need to build new capabilities, adopt new ways of working, embrace new workspaces, and above all, develop a completely new mindset with regard to operations, customer service and other core functions. Just to put this imperative in context, banks today are focused on delivering compelling and consistent Omni-channel experiences, complying with regulation, averting fraud, and reducing costs.

However, over the next 10 years, banks will have to also establish themselves as credible repositories of customers’ trust, and provide real-time and secure services in an automated and integrated manner.

Need to Reinvent Digitally

Accordingly, the conventional BFSI IT architecture will have to be reengineered for the industry to effectively serve the needs of the millennial generation. The good news is, BFSI firms recognize this pressing need for digitally reinventing themselves, and have been aggressively leveraging technologies such as artificial intelligence, blockchain and the Internet of Things (IoT) to create differentiated customer experiences. Every financial institution is reimagining its IT model from the grounds up.

However, orchestrating this transition is easier said than done, since many of the sector’s legacy systems lack the requisite flexibility to accommodate new functionalities. Also, stringent regulations do not exactly smoothen the process for BFSI firms to partner with non-financial institutions across various industries, for enabling on-demand customer experiences.

I firmly believe BFSI companies need to embrace a fundamentally “NEW IT” thinking, across the following dimensions:

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First, IT innovation has to be centered around customer centricity, and must be driven by data analytics to understand and address consumers’ requirements appropriately – and quickly.
 
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Second, BFSI IT must adopt “Platform Thinking” in relation to IT delivery, including experimenting with Agile/ DevOps methodologies and considering rolling out a decoupled, decentralized framework. This shift is critical for banks to be able to launch new products faster, in line with rapidly shifting customer preferences and demands.
 
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Third, financial firms must promote a collaborative work culture across their organization, as well as the broader ecosystem, in terms of encouraging a “Fail Fast” philosophy and reducing dependence on proprietary tech.
 
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Finally, they need to be flexible and scalable enough to disrupt their assumptions and operating models, based on continuous learning and rebuild, from scratch, if required.
 

The New IT Service Delivery Framework

In order to navigate this transition smoothly, financial services firms need to adopt a new IT service delivery framework that is based on the four pillars:

The framework should foster rollout of Agile and DevOps methodologies for accelerated software delivery, helping the organization reduce time to market for new products and services. For facilitating increased collaboration within and outside the organization, the architecture must enable the institutionalization of a common, integrated workspace for various stakeholders within BFSI companies. For example, banks should be able to leverage the framework to tie up with universities, fintechs and third parties for ideating around and developing cutting-edge solutions. To ensure rapid innovation, the framework also needs to help banks smoothly align themselves with cutting-edge tools and technologies, such as cognitive systems, artificial intelligence, machine learning, blockchain and Big Data. Finally, for ensuring robust IT governance, the framework should adopt an operating model that’s built on real-time reporting and flat organizational structure.

The AGILE Proposition

So, how can financial institutions begin implementing such a framework?

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To start with, they should do a pilot to validate the Agile proposition for their organization. The trial run should involve a product revamp entailing not too many functional modules, so that a cross-functional team can brainstorm and iterate on the product’s various sub-components.
 
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Banks can then conduct group-based workshops for defining the deliverable’s core aspects with all relevant stakeholders. As part of this exercise, the team would develop user personas, capture product requirements, chart workflows, etc.
 
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The next step is to integrate the product build into a common repository on a daily basis, so that the code can be tested in an automated manner. Programmers can then iterate the build on the basis of early defect detection.
 
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The last, but not the least, phase in the Agile delivery roadmap is for BFSI institutions to end their long-held practice of separating delivery and quality assurance (QA) teams. The user acceptance testing (UAT) team, embedded into the sprint-based delivery unit, conducts tests, and identifies bugs quickly for swift remediation, thus ensuring a substantial reduction in churn.
 

In Summary

All in all, I feel we have barely scratched the surface of the BFSI IT architecture re-imagination landscape. Banks, insurers and other financial firms need to use this transition period to quickly test out or revise some of their hypotheses, and accordingly build new systems. And, I am confident the industry will significantly enhance its value proposition in the coming years by adopting a next-gen IT framework that makes them more efficient, productive and effective.

ABOUT THE AUTHOR

Rahul Singh

Rahul Singh is President of HCL’s Financial Services Division. He is responsible for managing and steering the business, developing relationships with clients and taking long-term investment and strategic decisions to meet the technology and operation needs of the financial services and Fintech clients.</em></em>Rahul brings with him over 30 years of experience across outsourcing, technology, banking and financial services. He is widely recognized as an industry pioneer in the Business Process Outsourcing (BPO) segment for financial services in India and has been the recipient of SSF’s ‘Pioneer BPM Achiever’ award in 2016. He is now an authority on the impact of the Fourth Industrial Revolution on financial services. In 2018 he was invited by the World Economic Forum in Davos to present his thoughts on innovations and emerging opportunities in the investment industry to a select group of CEOs, bankers and technology leaders.