By Ed Fowler, Head of Digital Engineering and VP at Virtusa
One of the biggest emerging trends in the financial industry over the past few years has been the role of factory-style engineering in digital transformation – where banks create agile, large-scale solutions that are specifically tailored to the customer. From Citigroup’s UK-based innovation centre to the digital factories of Deustche Bank and Scotiabank, global banks have been scaling up digitisation efforts to constantly innovate at speed, scale and efficiency.
This trend is being powered by a new Moore’s Law in developer productivity, whereby developer output is increasing two-fold every 18 months. This is helping forward-looking banks to fight back and disrupt the disruptors, by building agile digital workforces that can create new services at scale in record time to meet the ever-escalating expectations of customers. However, to fully embrace industrial innovation, banks need to change their mindset and recognise their role as an engineering powerhouse, while staying true to their financial roots.
With this in mind, here are my tips on making the transition to factory-style engineering:
- Be willing to embrace change and build trust through a shared vision
Factory-style engineering requires a change not only in how people work, but in what they believe to be ‘possible’. For it to work, it needs to be embedded in an organisation from root to tip, it should not be confined to the IT department and instead be part of the ethos of the organisation. This requires senior leadership to provide a strategic vision that articulates what the business is trying to achieve, why it is changing and what it will mean across the business.
To do this, leaders across the organisation need to be able to show employees that are asking ‘what’s in it for me?’ why they should embrace change. This can be achieved by communicating the company vision with the support of hard evidence, explicit modelling and frameworks around outcomes and case studies – you need to show how and why it will work, in order to build trust. Essentially, the C-Suite need to buy into and embrace the change that is coming and take an active role in encouraging teams to test their own capabilities.
- Focus on value, not cost, to meet the dynamic needs of the digital consumer
Banks successfully carrying out large-scale digitisation projects have adopted a renewed focus on value productivity. While financial institutions used to buy in technology at the lowest price point possible, there is now a renewed focus on value, with banks seeking partners that can share their vision and build digital solutions to deliver meaningful business outcomes. This is transforming the supplier/customer relationship and helping to focus projects on outcomes, not cost margins.
To achieve factory-style engineering, resources must be channelled differently – with the successful completion of any given goal at the heart of all decision-making. If a project needs more team members, or needs external expertise, or requires a custom-made platform to be built from scratch, banks must put the pieces in place that will enable this to happen. Plans for any digital undertaking should not be assessed with an outdated ‘cost per person per day’ model. Instead, resources should be allocated to teams according to whatever they need to operate at their most productive level.
- Turn bankers into technologists, but stay true to your roots
One real differentiating factor when it comes to banks is their heritage. Their vast history in the traditional banking sector means they have a tremendous amount of data and expertise, something which is now proving to be the major hurdle facing new entrants to the industry. If banks are able to fully harness the power of this knowledge they can not only fight back against challengers, but win. Yet transformation is still required.
Making technologists of bankers is no easy feat, and, naturally some behaviours will have to be unlearned. Traditionally, banks have maintained a number of walled gardens within their organisations, with these silos limiting innovation and often forcing employees to pull in different directions depending on their personal or departmental priorities. With factory-engineering, every part of the process is as important as the last – if one piece breaks down, then everyone fails. This forces a collaborative culture shift – with the goal being for all teams to pull together to fulfil a shared goal.
One good way of helping this process along is to show teams real-world case studies of where similar digital projects have succeeded. It helps to unite different strands of the business together as they can see what it took to get initiatives off the ground and better understand what is feasible within a certain timeframe. Having a common, tech-focussed vision whereby bankers can see key digitisation initiatives through from end-to-end drives a deeper understanding of what the business is trying to achieve, whether individuals are directly involved or not.
The possibilities are endless
Factory-style engineering is very much an achievable reality in the financial industry. However, it requires the ideal conditions to be in place, meaning the banking status quo will need to undergo some changes. Organisations must take steps to transform the bank’s mindset now, prioritising productivity and agility over cost concerns, and educating teams on the importance and significance of a shared digital goal. While making the initial shift to an output-oriented mindset may seem daunting, organisations that implement factory-style engineering amid an ever-changing financial industry are building a future they can really bank on.