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The next thing: Agile banking?

How an old/new concept can accelerate innovation

Bank tech trends can make your head spin. So each week longtime Tech Exchange Editor John Ginovsky does his best to “make sense of it all.” Bank tech trends can make your head spin. So each week longtime Tech Exchange Editor John Ginovsky does his best to “make sense of it all.”

Jus when you thought you’d caught up with all the banking technology buzzwords, another comes along.but one would be wrong.

Which brings me to … “Agile banking.”

Based on some background reading, the term and concept have been around for quite some time. For example, a ComputerWorldUK story from 2012 documents how JPMorgan Chase overhauled its business processes, improved its product development, and slashed the costs of trading—all while using “agile development methodology.”

Just last month, Stuart Bilick, global banking industry market segment manager for IBM, blogged about “becoming an agile bank.”

“Banks face three key challenges to become an agile bank: existing application complexity, changing customer behavior, and increasing amounts of data,” he wrote. “To address these challenges and better serve customers, banks need to create a strategy to improve their core banking systems.”

Specifically, Bilick cited the onset of several emerging technologies banks need to grapple with as they deal with increasing pressures of regulation, competition, and strategic agendas: cloud, analytics, mobile, security, and social. In short, he said, what’s needed is an approach that uses such technologies to “create capabilities in a different way using a more componentized architecture to deliver a simplified view and better solutions to their customers.”

A framework and a strategy, he says, which enable “them to become more agile in the marketplace.”

Underappreciated elegance

Some background: Apparently the whole “agile” concept (not “agility,” “agile”) was created in February 2001, at The Lodge at Snowbird ski resort in Utah. Seventeen software developers gathered there casually, and in the process they wrote up what they subsequently termed the “Agile Software Development Manifesto.”

It came about after they generally bemoaned what they called the “Dilbertesque” approach to software development that they experienced in their day jobs. For example, they indicated, “people” were perceived to be merely “end users,” and software elegance didn’t really matter to corporate leaders.

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Instead, the 17-member “Agile Alliance,” as they called themselves, came up with 12 principles, the first of which is: “Our highest priority is to satisfy the customer through early and continuous delivery of valuable software.” (Read all the other principles at Agile Manifesto www.agilemanifesto.org.)

Agile development platforms

Okay, fast forward to today and how observers have applied the concept to banks. Martin Cooper writes in an April issue of CloudComputing News about how traditional banks are threatened by disruptive competitors—specifically those competitors that embrace agile methods.

“The key strength of new disruptive challengers such as Apple Pay and indeed, PayPal, is their willingness to embrace agile technologies such as cloud infrastructure in order to offer consumers the services they want,” he says.

Less ominous but more specific, Accenture talks in a recent white paper about “agile development platforms for an agile multichannel bank.”

“Accenture believes that creating an IT function that is more agile and responsive to the business involves two parallel paths of activity,” it says. These are:

  • Designing a more flexible enterprise architecture, mainly by reducing silos. They can do this by encouraging IT and the business to work together, using rapid application development tools, and implementing an architecture that supports delivery through multiple channels.
  • Leveraging a more flexible approach to application development using a multichannel methodology. This would entail confirming scalability and performance of platforms, focusing on platform independence that precludes committing to specific technologies, confirming interoperability of applications, leveraging a strong user-interface development capability, and using an information/integration hub for development.

So, it’s clear that “agile banking” is a thing now.

10 principles for agile development

Gartner, which has a penchant for buzzwords (often coining its own) has embraced the “agile” concept to the point that it explored it in depth at a July conference in Sydney, Australia. Nathan Wilson, research director at Gartner, says: “Done well, agile development can be an integral part of the portfolio of methods that the CIO uses to deal with increasing business demand for innovation. Done badly, agile development will create a lot more problems than it solves.”

To that end, Wilson provides a top ten list of guiding principles for agile development:

Agile is not one thing. It’s a set of approaches to software development that share a common philosophy but are sharply distinguished in the details of their implementations.

Agile is not a pick-and-mix methodology. Agile methods are highly systematic. Every component element of the methodology is crucial to the success of the methodology.

Embracing agile is a joint business-IT activity. The full benefits of agile cannot be achieved without engaging with business leaders, management, and the user community.

With agile, it is important to walk before you try running. Any organization that is starting out on the agile journey needs to start in the foothills to develop the confidence and competence to take on larger [i.e., Mt. Everest] tasks.

Embracing agile is embracing continuous learning. Every development must be analyzed for lessons that can be used to improve policies and working practices.

Agile is about teams and about teams of teams. The basic organizational unit of delivery in agile development is a small team, typically expressed as “seven, plus or minus two people,” both developers and quality assurance.

Documenting, managing, and eliminating technical debt is a core concept of all agile methods. Technical debt is the difference between the state of a piece of software today and the state that it needs to be in to meet appropriate and necessary requirements for quality attributes such as reliability, performance efficiency, portability, usability, maintainability, and security.

Working with third-party development service providers on agile development demands special care and attention. Colocation with business users is axiomatic to agile methods.

The impact of agile goes well beyond the software development teams. Agile methodologies are predicated on continuous engagement with business managers and users, and lead to the delivery of a continuous stream of new and modified software into the operational environment.

Other software development methodologies will still have a place in your portfolio. The application portfolio will present many different classes of development problems, some of which will be well-suited to agile, while some may be better-suited to incremental, iterative development, and some to a modified waterfall model. Agile is not “better.” It is simply better-adapted to some problems.

Agile. Agile development. Agile banking. It really is a thing.

[Note: Many of the principles described here are in use in Bank of New York Mellon’s technology group, although it does not tend to use that term. Read the Banking Exchange magazine article about BNY Mellon.]

Sources used for this article include:

Agile development platforms for an agile multichannel bank

Traditional banks vs. disruptive competitors: Why agile infrastructure matters

Gartner Highlights 10 Things CIOs Need to Know About Agile Development

Becoming an Agile Bank

Principles behind the Agile Manifesto

JP Morgan overhauls global IT with Agile development and automation

John Ginovsky

John Ginovsky is a contributing editor of Banking Exchange and editor of the publication’s Tech Exchange e-newsletter. For more than two decades he’s written about the commercial banking industry, specializing in its technological side and how it relates to the actual business of banking. In addition to his weekly blogs—"Making Sense of It All"—he contributes fresh, original stories to each Tech Exchange issue based on personal interviews or exclusive contributed pieces. He previously was senior editor for Community Banker magazine (which merged into ABA Banking Journal) and for ABA Banking Journal and was managing editor and staff reporter for ABA’s Bankers News. Email him at jginovsky@sbpub.com.

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