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Why investment banks get agile so wrong

It's been going on for a few years now, but banks everywhere in love with agile techniques. Quarterly results announcements are peppered with references to agile, and to the proportion of staff working under its strictures. 

But as regular readers of eFinancialCareers will know, the implementation of agile in banking has a few issues. "Agile specialists who join banks are only going to be disappointed," wrote one developer here a few years ago. "Banks are highly-regulated and hierarchical organisations, where end users (typically traders) have no real interest in participating in daily meetings to discuss the progress of a technology project."

Gawain Lee-Son, director of agile delivery and transformation at consultancy firm Rightpoint, says this isn't the only problem. Lee-Son has consulted for a number of institutional clients including Goldman Sachs, JPMorgan and Morgan Stanley. He says banks have a tendency to reach for off-the-shelf agile solutions which aren't suited to their needs. 

Why agile fails in banking

Enthusiasm for agile is highest in technology, says Lee-Son. Because of this, he says there are often "team level adoptions within IT only." The remainder of the business, including end-users, aren't really onboard with the process. Because of this, he says banks end up "separating delivery teams from customers to become 'feature factories.'" When end-users aren't integrated into the agile process, teams end up developing features based off wish lists instead of what the consumer of the product actually needs.

In other situations, Lee-Son says responsibility for the transformation is handed to a large consultancy that comes to “install” a carbon copy of "some framework without focusing on leadership, structure or even culture."

Mostly, though, hierarchy is the issue. "Institutions aren't willing to break down silos" says Lee-Son. For young engineers especially, this is a big issue; over half of stack overflow survey respondents experienced disrupted workflows due to sluggish decision-making.

Banks oversee an abundance of "cargo culting agile" says Lee-Son. Named after a curious phenomenon in WWII, it describes firms replicating the mechanisms and processes of agile without understanding what makes agile actually tick.

"I often hear leadership talk about culture but not act the culture they want to become" he adds. 

How do you avoid this? At UBS, where CEO Ralph Hamers is a massive proponent of agile, agile coaches have been hired en-masse to propagate the methodology and culture. UBS has 17 agile coaching positions open, for example, and was spied hiring for a 'Group CTO/Agile Coach' earlier this month.

However, even UBS is behind where it wanted to be. The Swiss bank wanted to have 25,000 agile workers by this point in time, but has 18,500 according to its most recent report.

"Agile shouldn’t be the goal; it should be a means to an end." Says Lee-Son. "The goal should be to create value for customers; to learn, adapt and understand what that value may be"

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AUTHORAlex McMurray Editor
  • mi
    5 March 2023

    Adoption of agile for Banking infra projects look more like fake agile and generates agile anti patterns which is unavoidable for large banking IT infra organizations. Fundamental nature of Banks IT infra is about stability, security , standard and compliance which is opposite to nature of Agile.

  • ph
    2 March 2023

    For some work, agile makes great sense. Bloomberg comes out with a new version of their software, with small changes, about once per month, so agile works well for that. But some projects, say responding to a major market or reg change, is a one shot thing, and for that waterfall may make far more sense. But not all big bosses understand this, and just rush to the latest buzzword ideas.

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