One of the biggest emerging trends within the financial industry over the past couple of years has been the role of factory-style engineering in digital transformation – where banks create agile, large-scale solutions which 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 as fast as possible, 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 have to change their mindset and recognise their role being 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 via a shared vision
Factory-style engineering requires a change not only in how people work, however in what they believe to be 'possible'. For this 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 involves senior leadership to provide a strategic vision that articulates exactly what the business is trying to achieve, why it is changing and what it will mean across the business.
To do this, leaders over 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 organization vision with the support of evidence, explicit modelling and frameworks around outcomes an incident studies – you need to show why and how it will work, in order to build trust. Essentially, the C-Suite have to buy into and embrace the change that is coming and take an energetic role in encouraging teams to test their own capabilities.
- Focus on value, not cost, to satisfy the dynamic needs from the digital consumer
Banks successfully carrying out large-scale digitisation projects have adopted a renewed focus on value productivity. While banking institutions used to buy in technology at the lowest price point possible, there is now a renewed concentrate on value, with banks seeking partners that may share their vision and make digital solutions to deliver meaningful business outcomes. This is transforming the supplier/customer relationship and assisting to focus projects on outcomes, not cost margins.
To achieve factory-style engineering, resources must be channelled differently – with the successful completing any given goal at the heart of all decision-making. If a project needs more associates, or needs external expertise, or requires a custom-made platform to be built from scratch, banks must place the pieces in place that will enable this to happen. Plans for any digital undertaking shouldn't be assessed with an outdated ‘cost per person per day' model. Instead, resources ought to be allocated to teams according to anything they need to operate at their most efficient level.
- Turn bankers into technologists, but stay in keeping with your roots
One real differentiating factor with regards to banks is their heritage. Their vast history within 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 can fully harness the power of this information they can not only fight back against challengers, but win. Yet transformation continues to be required.
Making technologists of bankers is no easy feat, and, naturally some behaviours will have to be unlearned. Traditionally, banks have maintained numerous 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 stops working, then everyone fails. This forces a collaborative culture shift – using the goal being for all teams to pull together to fulfil a shared goal.
One good way of helping this process along would be 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 around the importance and significance of the shared digital goal. While making the first shift to an output-oriented mindset might seem daunting, organisations that implement factory-style engineering amid an ever-changing financial industry are building a future they can really bank on.