The financial services industry can ill-afford to drag its heels over IT innovation any longer. The rise of fintech now poses too much of an existential threat for a mature enterprise to sit idly by. Modernizing IT infrastructure through software delivery is now a priority to extract more value from IT, enhance the functionality and reliability of products and systems, and improve data integrity for faster, more accurate compliance reporting.
The rise of Fintech
Fintech enables startups to disrupt the market by easily and cost-effectively offering services such as wealth management and corporate trading. The fact thatfintech companies have raised over $105 billion in total funding, worth nearly $870 billion in current value is a strong indicator of the role technology now plays in finance. IT isn’t just part of the business; it isthe business.
The U.S. market is being shaken up by a slick army of private, venture-backed players such as Stripe (online and mobile payment for merchants) and Prosper (connecting borrowers and investors), to name but a few. These digital-native companies were born Leanand Agile, and have built their own in-house software delivery toolchains to be able to rapidly plan, build and deploy software products at speeds that traditional enterprises can only dream of , at least in their current state.
These startups possess a core digital framework that provides them with full visibility and traceability into how work flows across their toolchain to deliver the products — which are closely aligned to business outcomes — at breakneck speeds. They can spot bottlenecks and optimization opportunities within a few clicks of a button, forcing larger institutions to change their operational environments to adapt to new market needs such as Apple Pay and other forms of mobile payment. It’s not just about products anymore, it’s all about enhancing the customer experience and reducing the dependency on physical banks for everyday transactions.
The legacy hangover
When it comes to software delivery, financial institutions are far more encumbered than their digital-native competitors (and other non-regulated industries) for a number of key reasons, including the following:
Heavyweight tools: The applications they maintain require the use of heavyweight application lifecycle management and test/QA tools (such as Micro Focus ALM/QC and IBM DOORS). The latter ensure rigorous scanning of business requirements and builds to reduce the possibility of downtime outages, unacceptable user experiences and exposed data security of investment portfolios, etc. These influential legacy tools slow down the end-to-end process from customer request to operation due to toolchain fragmentation.
Compliance: This leads us to audits. All work activity that pertains to a product’s development must be documented from start to finish. But this data exists in multiple systems across the toolchain that plans, builds and delivers software, and requires huge levels of manual effort to collate and analyze.
Large IT teams: The size of IT teams at finance enterprises is truly staggering.Bank of America, for instance, has 95,000 staff and counting.And that’s not even mentioning the work outsourced to third-party companies. These teams use their own tools and methodologies. And they’re all creating important data that must be linked to original and evolving requirements.
Existing customer base: Long-standing customer bases are being served by existing products. These respective product workflows have been refined over time and any changes to the software delivery value stream and IT infrastructure cannot interrupt the ongoing service and value provided to end users.
CIOs must also improve the time to value of digital services and products to compete with the tempting service offerings of younger startups while ensuring data consistency across all systems to enable them to pass stringent audits.
What if IT leaders could see the bottlenecks that are draining IT budgets and increasing overhead through unnecessary manual work? This is where value stream management comes into play. In Elevate Agile-Plus-DevOps with Value Stream Management(Forrester Research, Inc., April 20, 2018), value stream management is described as “a combination of people, process, and technology that maps, optimizes, visualizes and governs business value flow (including epics, stories, work items) through heterogeneous enterprise software delivery pipelines.”
As such, it allows CIOs to see and trace all work intake — internal and external — to create balance between IT and the business, as well as transparency across the industry.
Connecting data points via value stream management
Once CIOs begin to think in “waste and value,” they can see how money and time is being squandered in the software engine room that underpins their banking businesses. Enabling them to see how value flows from business request to delivery and back through the customer feedback loop lets them build a framework that transforms IT from a cost center to a profit center. At the core of value stream management is connecting all data points in a product’s value stream to visualize that end-to-end flow.
By integrating all the toolchains, bank institutions get an automated flow of information across the value stream, the much prized “one source of truth.” Through connecting these points, as Forrester points out, value stream management provides greater transparency, measurement and control of the software delivery pipeline.
Compliance reporting made easy
Crucially, beyond removing manual overhead of duplicate entry, spreadsheets, meetings, email threads etc. – dramatically improving productivity and removing waste – it enables easy and accurate reporting for audits and compliance.
Furthermore, by visualizing all work activities, IT leaders can see where their bottlenecks are, outside and inside of the Agile and DevOps stages, to see opportunities for optimization. Where is tech debt building up? Where is working getting stuck and why? How long did a product take at each stage of development after leaving the backlog? Was it even the priority item off the backlog?
The integration component (value stream integration) helps enterprises to create a modular infrastructure that allows new specialized tools, teams and ideas to be introduced without disrupting existing workflows. Banks can use this capability to experiment with new elements that help them build better products faster, like their leaner rivals.
This technology approach leads to actions becoming measurable and manageable, makes innovation possible and even improves data traceability. And suddenly IT becomes an investment opportunity, not an expense.
- Banking Algorithms, the Apple Card and Sexism
- Senior Official Recommends the Launch of a Real-Time Payment System to the Federal Reserve
- Intelligent Engagement in Commercial Banking
- Three Ways Technology Can Make Banks More Resilient
- What Santander Bank’s Acquisition of Ebury Means to the Banking Industry