Are we witnessing an Agile Revolution in Client Onboarding?

Traditionally, a digitisation project at a financial institution has been a unique opportunity to shape the way entire teams work, introducing procedures and systems that would stay in place for a long time. 

But this was before 2020. Since the beginning of the pandemic, financial institutions had to adapt to new challenges at an extraordinary speed. Whether dealing with working from home requirements, remote onboarding processes or the digitisation of services usually provided in-branch, the concept of agility gained unprecedented industry attention.  

In software development, the term Agile refers to a very specific way of writing code and building products which involves adaptive planning, evolutionary development, early delivery, and continual improvement, encouraging flexible responses to change.  

When 17 industry experts and pioneers gathered in a ski resort in Utah and released the Agile manifesto in 2001, the standard Software Development Lifecycle (SDLC) approach was still the traditional sequential (or waterfall) methodology, where all development is specified to the smallest detail before development starts and work is clearly divided into subsequent and distinct phases.  

From the early-2000s, the Agile methodology’s popularity and maturity have grown exponentially. In its early days Agile was associated with young and fast-growing tech unicorns such as Google and Facebook ("Move Fast and Break Things” was Facebook’s motto for software developers until 2014). In the last few years more traditional sectors such as financial services had begun embracing its potential, but it was this year’s global pandemic that generated renewed momentum for the methodology. 

Embracing an agile way of working helps financial institutions de-risk the implementation of their digital strategy. For years they have been trying to “value assure” the results of large IT programs, after experiencing large and expensive failures (McKinsey). But 2020 has moved accelerating and de-risking IT projects to the top of the priority list.  

As a traditionally manual- and paper-based function, the area of KYC compliance and client onboarding has been one of the most impacted by the current “agile revolution”. Interestingly, the speed of change that this function is now experiencing makes it a great example of how financial institutions can benefit from an agile approach.  

Agile planning 
2020 has taught us that the speed businesses adjust to unpredictable change is the key factor in whether they can thrive in times of uncertainty. Embracing an agile approach to planning is essential to ensure a smooth and timely operational roll-out of any digital onboarding implementation. In essence, this means bringing together expertise in regulatory compliance, risk, UX/UI, Customer Support, and IT via cross-functional teams collaborating towards specific objectives and achievable goals, accelerating execution while finding the middle ground between opposing requirements.  
 
Agile technology 
Whether building in-house software or partnering with third-party providers, IT teams should implement digital solutions that can be configured based on today’s pressing needs as well as be adjusted to the requirements of tomorrow. Introducing cloud solutions can often provide the level of dynamism and elasticity that this kind of project requires, especially in the increasingly remote working paradigm that 2020 has bestowed on us. Goldman Sachs, Deutsche Bank, HSBC and Santander have all started embracing cloud computing to outsource their storage of data and other activities in 2020. 

Partnering with experienced but agile third-party vendors is a good way of accelerating digital KYC implementations in times of need. No two companies are totally alike, but a meaningful partnership provides financial institutions with access to years of learnings and experience, helping them avoid potential issues or predictable roadblocks. Those financial institutions that already adopted an agile approach have the advantage of better compatibility with younger tech firms, providing their cooperation efforts with a much higher chance of being successful.  

Agile regulatory set-up 
Digital KYC and remote onboarding systems need to be fully compliant with the anti-money laundering regulations of today. However, in 2020 we have learnt how fast new requirements can be introduced if the industry is pushing for it (the May 2020 FATF report on “COVID-19-related Money Laundering and Terrorist Financing Risks and Policy Responses” provides a great summary of these changes). For this reason, financial institutions need to ensure that their implemented solutions can be adapted to new regulations as they are introduced or the requirements of foreign jurisdictions, because the current tide of regulatory changes is far from being over.  

The last few months have taught us a lot about the importance of embracing agile ways of working. If a bank’s ability to sign new clients fully depends on having a digital onboarding process in place, quickly implementing a functioning digital solution becomes of the utmost importance. In this situation, working in an agile manner across different teams is the best way to ensure a positive outcome. 

On a higher level, fostering a truly agile mindset also represents a unique opportunity to impact company culture and engrain a new appreciation for customer-centricity, team member’s initiative, and flexibility at every level of the organisation.