Digital transformation has not chosen specific verticals to show its importance. All industries deal with competition on a daily basis, and they know that offering digital products is part of gaining competitive advantage. This is no different for banks. Here’s how they’re changing.

Agile Transformation in Banking

Every day, more and more Fintechs are emerging, and they are being created with a digital-first DNA. Banks need to be prepared for this race and adapt by modernizing.

When we talk about digitally transforming, we cannot fail to mention Agile as the pillar for the delivery of digital projects. Digital transformations lead to Agile transformations. Agile management allows changes to projects and processes much faster than traditional ways of working, thus ensuring that projects can respond quickly to evolving requirements throughout the process. For companies to gain competitive advantage, they must change how they organize their portfolio and deliver projects, and they must also change how they manage costs, people, and especially the added value of their projects. Agile is what supports this change.

In this article, we will talk about how traditional, hierarchical, and rigid companies like banks are changing their culture to implement Agile methodologies and deliver their digital projects efficiently. We’ll also look at a real case of Agile transformation at a Fintech.

The Opportunity

For the purposes of this article, we will call the bank in our use case the AC Bank. Like most banking environments, AC Bank’s organizational structure followed an old and hierarchical model where people had specific functions: Leadership made the decisions, and development teams did not have all of the context. Communication was not fluid, and innovation did not have a fertile space for growth.

AC Bank had a highly traditional and vertical environment with several silos, but the good news was that there were promising signs that an Agile transformation was about to start in the form of a pilot within some of the teams. 

The pilots launched. Teams began to see the value of Agile, and deliveries started to be more assertive. These deliveries had better visibility, and other teams within AC Bank wanted to understand what the Agile teams were doing differently to have greater success with their deliveries. They began to ask: 

How can we effectively scale this model?

In addition to these factors, AC Bank already had a separate division called the Digital Lab, making it necessary for the Agile teams and the digital division to join forces to keep a stable point of reference in a scenario of volatility, uncertainty, complexity, and ambiguity, and at the same time restructuring AC Bank so that the Agile mindset was part of its culture.

Our Approach

Before implementing Agile throughout the organization, it was necessary to understand the current enterprise scenario. Often when talking about Agile or digital transformation, people think of the teams and frameworks used. But having teams working with Scrum, Kanban, or any other framework/Agility practice does not guarantee that value is being delivered or that the environment will be Agile and quick to respond to changes.

When we talk about Agile transformation at the enterprise level, we need to have buy-in, and we also need educational alignment at every layer of the company. Understanding how each area works and relates to other departments - and understanding the silos, the motivations, the needs, and how much the hierarchical culture is rooted in that organization - is of paramount importance in defining a successful transformation strategy.

During the assessment phase, we made some discoveries that needed to be addressed in order to achieve complete transformation. For example, AC Bank had:

1. A project portfolio with weak prioritization;
2. Teams with challenges related to culture, Agile practices, inspection, and adaptation;
3. Difficulty with the DevOps culture and managing continuous integration and continuous deliveries (CI / CD).

To turn these challenges into a successful Agile transformation case, we adopted new approaches for every department in parallel, as we will see in the next section.

The Solution

There are several challenges to changing an organizational culture, and none of them can be ignored. To change the mindset at all levels of the organization, we needed to focus on all of the following: reducing bureaucracy, breaking silos, improving the understanding of generating business value, and improving communication and collaboration between areas, teams, and people. 

After understanding the current scenario, the current maturity, and our collective company goals, we started by mapping action plans and defining who would be responsible for each action.

Some teams were already using Agile methodologies and needed to scale, so our initial work with AC Bank was to coach executives, superintendents, and directors. This coaching started with the presentation of Agile principles, successful cases of transformation in large companies, understanding Agile prioritization by business value, workshops to assess the current state of the business and user experience, and - a crucial point for the success of the process - the importance of the support of the executive group for the transformation.

In this case, support alone would not be enough. We needed to ensure engagement, so we raised awareness that the executives would also be responsible for certain actions within the transformation plan. Examples of the actions taken by executives include: 

1. De-hierarchization;
2. The creation of a Product Management Group to invest in value deliveries;
3. Definition and measurement of metrics (hindsight); 
4. A physical renovation of the office space to include an open office floor plan. 

After obtaining the engagement and buy-in of the executives, the next step was to have coaches conduct trainings and workshops focused on middle management. Generating the engagement of the middle managers of the teams in transformation was extremely important. The socialization of the transformation plan was underway, supported by all levels of the organization. This generated an even greater engagement of different teams and areas, creating a sense of collaboration throughout the whole company.

The teams received Agile training, and the responsibilities of each role were defined. 

CBE: The Secret Ingredient

It’s important to note, however, that trainings and workshops alone were not enough to transform teams that previously followed a waterfall model. A change of mindset was also needed. To do this, we identified (together with software engineering) the biggest gaps in the software development teams and introduced the methodology created by Avenue Code: Coach by Emergence ™ . 

Coaches by Emergence (CBEs) are coaches with practical knowledge in a given area. These coaches join the Agile team as an integral part of the team for approximately 3-4 months, seeding the culture and setting it up to multiply within the team. The result? After a while, the team transforms and emerges as thought leaders. 

As CBEs have practical experience with agility, they encourage the team to use practices related to both Agile culture and Agile development and always seek for continuous improvement. The CBEs understand the challenges and culture of each team and team member before starting their work. Then, they do pair programming, guide employees in how to exercise their roles better, conduct trainings and workshops, help the team adopt Agile best practices, create knowledge pills, use common tools, and utilize Agile metrics to measure the progress of growing Agile maturity within their team.

The role of CBEs became an important part of Agile transformation within AC Bank teams and brought relevant insights into delivery difficulties using CI / CD concepts. They also shed light on blocks in other areas with silos. 

Finally, we started to work on creating a DevOps culture, using a DevOps coach to enable the culture shift for iterative releases to reap the true benefit of the Agile Software Development methodology. 

During this time spent with different teams and layers of the organization, the importance of Agility in other areas of the organization, like HR, became very apparent. Why? Agile affects every department. HR, for example, brings enormous benefits to an Agile organization when defining the process for selecting, hiring, and onboarding new employees. For this, an HR CBE was also introduced with a focus on HR Agility.

Results

AC Bank now has more than 20 teams working in a high level of Agile maturity. To ensure that the Agile mindset is progressing and being continued based on the Kaizen method, we adopted Health Check metrics within teams. During these checks, CBEs were able to demonstrate the evolution of the teams by using metrics to show how the consumer’s perception of the product is better and how deliveries are faster, not in speed, but in assertiveness with frequent iterative deliveries that generate quick value as opposed to one large project delivery after a long period of time.

Now, deliveries align with the needs of the client areas and generate both perceived and measurable value, which in turn helps executives in their decision making. The maturity reached by every AC Bank team is now approximate to the work model of its Digital Lab division.

In HR, we see improvement in the employee experience and in the level of satisfaction of the teams. There are tangible results demonstrating that the work environment and employee mental health are better, including fewer sick leaves. Similar tangible efficiencies were seen throughout the entire organization after the Agile transformation. 

Like in any big transformation, work often takes place with different initiatives running in parallel, focusing on a continuous journey of improvement. So, we continue to work in all spheres to guarantee the continuity of the mindset and other improvements in maturity. 

Most importantly, the Agile transformation at AC Bank enables the organization to adapt quickly to meet evolving and ever-growing demands for a digital-first experience, meaning that AC Bank now enjoys a significant competitive advantage.

*This blog was co-written by Alexander Carvalho.