Agile teams break large, complex problems into modules and develop solutions for each component through rapid prototyping and tight feedback loops. These teams are self-governing and hold themselves accountable for outcomes such as growth or profitability instead of outputs like the number of new products. Such organisations function as organisms with multiple autonomous networks that have a common objective.
Traditional banks have been known for their rigid top-down hierarchies, mid-level bureaucracies, and specialised teams working in silos. This organisational model was designed based on Frederick Taylor’s theories on scientific management that optimised labour productivity, which became a paradigm for managing companies throughout the 20th century.
However, digital transformation has forced companies to rethink this paradigm and empower multidisciplinary teams that provide end-to-end solutions to business challenges. Banks have been on the frontline of this change as their digital competitors have compelled them to undertake ambitious digital transformations.
One of the main advantages of digitalisation is that businesses can gain a single view of the customer. In the case of banks, this provides enough data to evaluate a customer’s income, loans, and other transactions to better tailor offerings based on their preferences and behaviours. An agile approach allows banks to solve pain points in the customer journey in a micro fashion and build on these changes incrementally. Most importantly, it puts the responsibility for innovation in the hands of those who are closest to customers.
Customer-centricity is at the heart of agile teams’ culture. The ability to rapidly adapt and change course when needed proved fundamental during the Covid-19 pandemic. Companies embedding agility into their operating models were also the most successful at managing the impacts of the Covid-19 crisis, as reprioritisation came more naturally.
Putting speed before perfection and not being locked into strategic plans that were no longer relevant also tempered negative effects. Agile organisations were nimble enough to avoid the worst impacts of the pandemic as they put speed before perfection and were not locked onto a strategic plan that was no longer relevant. These companies also empowered frontline employees, which gave them the ability to closely engage with customers and respond to their needs in real-time.
Download our article in collaboration with the Economist Impact and find out what characterises agile organisations, and, whether agility can help financial institutions stay ahead of the curve.