Since technology permeates everything we do, it is no surprise that engineering and development methodologies used in information technology (IT) diffuse into other areas of the bank. In the 1980’s the “waterfall” methodology went mainstream and management organized new products, processes, marketing campaigns and everything else around the concept. By 2000, “agile development” was all the rage. Now, in 2018, “DevOps” is the latest management development methodology. In this article, we look at the evolution of new idea development in banking and how it might be improved.
Ideation to Execution
Project management, business process management, and value-add analysis have all been put at the forefront of the banking world. These days, it is not just what you do, but how well you can do it, and how efficiently you get it done. The process of creating new banking products, transforming the branch, rolling out new marketing programs and the development of new banking technologies are now getting attention.
Banks, for the first time since the post-World War II, are now paying attention to HOW they execute on new ideas. As technology and competition heat up, the concept is that banks that can iterate faster will have a better chance of surviving.
The waterfall methodology of new idea execution is what most bankers learned in school. It was the most abundant and accepted project management technique for several decades and was characterized by a linear, sequential process. The waterfall method was centered on having specific objectives for each phase of a project. First, a problem is analyzed, then brainstormed, then, once an idea is decided on, requirements are written as to how to solve any given problem.
Once a plan is designed, the product or process is built, tested and then brought live. The concept is to break the business process down into distinct procedures, and each would be completed in a sequential, linear fashion. The latter would begin once the former was completed successfully.
This methodology served banks well for decades until programming languages and libraries became more efficient. IT managers soon realized that the waterfall methodology had too much risk. The advent of faster development cycles means you could create a minimum viable product (MVP) and bring it to market using an agile methodology.
Reengineering the Waterfall: Agile Operations
Through the late 1990s, banks began to place much more emphasis on the goals of efficiency and resource minimization when it came to product development and routine processes. This meant that project management had to be designed in a way that allowed managers to account for errors at any point in the process. Many banks elected to transition to a method that not only accounted for this change but also provided them a far-sighted approach in the execution of projects.
The underlying concept of the agile methodology is to reduce the requirements time in exchange for building a simple work product and then testing it. By iterating quickly, banks can be years ahead of where the waterfall would lead.
Unfortunately, many banks became too comfortable with the agile approach, ultimately making false presumptions about processes in an effort to maximize productivity. After time, development teams began to micromanage other departments, while operations teams grew lethargic due to a lack of fixed schedules or set completion dates.
DevOps has grown to become one of the most popular IT buzzwords today, but what does it mean? How is it any different than Agile?
DevOps and Agile both share similar characteristics in terms of project development, but DevOps takes it a step further. In DevOps, instead of focusing on just creating a product or process and then turning it over to the business owner, the methodology focuses on the synchronization between development and operations teams in order to ensure dependable and efficient project development. Rather than spending 100% of the effort on the project, DevOps looks at the entire process of how the project is going to be utilized. DevOps takes aim at transforming company culture, breaking down silos, and creating a fluid employee environment.
Through increasing interaction between teams, providing value-based feedback, and encouraging employee versatility, banks are able to make tremendous strides in improving productivity while also mitigating both resources and errors.
The classic example is mobile banking. Where the waterfall methodology would have just introduced an application and then moved on, agile would have spent time with users to produce several iterations of the app before it stabilized. However, under DevOps, while the tech development team would be focusing on creating the app, the operations team would be focusing on marketing, training, introducing the product into the branch, plus providing feedback to the development team on how to upgrade the product.
Application of DevOps
The DevOps methodology is a more holistic approach to project management and it recognizes that a successful introduction of a new product or process goes beyond just the work product. In terms of project progression, DevOps provides a notable advantage in the sense that it allows banks to identify issues, whether it derives from personnel, marketing, management or the product itself, immediately.
One bank recently used the DevOps methodology when rolling out a new checking line up. The waterfall way would be to have the deposit group create the new line up, then send to marketing, then introduce the product to the branches and then to the public. Using the DevOps approach, the bank decided to introduce just five of the new seven products into a single market, test it and then expand from there.
What is learned is that it only needed four of the seven accounts in most markets and six of the seven in two of its markets. Further, it also learned that it needed a different marketing approach and that some of the checking features needed to be bundled with mobile banking from the start of account opening.
The end result was better collaboration between the branch, deposit management, marketing, technology, and management.
The DevOps methodology can also be highly leveraged when going into new markets. Successfully penetrating a new market lies in a bank’s ability to adapt to change and foresee the future with a new customer set. Increasingly, a dynamic DevOps culture provides that flexibility, and ultimately, the confidence to take on the risk of a new market.
For your next project management cycle, consider forming more cross-functional teams and taking a more DevOps approach. Development and operations are directly correlated with a banks bottom line, product design, and process improvement, and those who fail to adapt to change only risk being left behind in the race to generate valuable, effective products to customers.
About the Author: This is a guest post by Jacob Jones, an analyst at CenterState Bank.
Submitted by Chris Nichols on August 07, 2018