Can You Adopt an Agile Approach to Compliance?

One of the buzzwords in business these days is “agile.” If you’re looking to learn more about what an agile approach is, and how it can be used in compliance, this post is for you.

You’ve probably heard the word “agile” to describe a way of working.

The “agile” approach is a common term in Silicon Valley and in startups, but it’s still somewhat new for banks and more traditional businesses. If you’re like most banking professionals, you probably have a few questions about what it is and why it might be relevant to your role.

In this post, we’ll define “agile” and help you consider if this approach can help you in compliance.

A Quick History of Agile

First, a little history. “Agile” is a modern approach to software and product development.

Traditionally, product and software development has relied on planning and documentation with clear guidance from leadership. After a product launches, changes are made based on user feedback, but those changes are clearly planned and tracked. It’s highly structured process.

Agile is a very different approach because it’s focused on iteration and collaboration with frequent communication among developers and end-users. Cross-functional teams collaborate to constantly evaluate the product and implement rapid, continual changes. Agile is more flexible and allows for something like evolution.

Agile is all about collaboration, delivery of products or solutions, iteration, and improvement.

There are 12 principles of agile development. They are:

1. “Satisfy the customer through early and continuous delivery of valuable software.
2. Welcome changing requirements, even late in development. Agile processes harness change for the customer’s competitive advantage.
3. Deliver working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.
4. Business people and developers must work together daily throughout the project.
5. Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done.
6. The most efficient and effective method of conveying information to and within a development team is face-to-face conversation.
7. Working software is the primary measure of progress.
8. Agile processes promote sustainable development. The sponsors, developers, and users should be able to maintain a constant pace indefinitely.
9. Continuous attention to technical excellence and good design enhances agility.
10. Simplicity–the art of maximizing the amount of work not done–is essential.
11. The best architectures, requirements, and designs emerge from self-organizing teams.
12. At regular intervals, the team reflects on how to become more effective, then tunes and adjusts its behavior accordingly.”

The agile approach to software development can be applied to other kinds of development and problem-solving efforts. To make that possible, it’s typically supported by a new project management strategy called Scrum.

Not everyone agrees that agile is the best approach, but it has illuminated new and different perspectives in fields far beyond just product development. We’ll get into how compliance pros can implement the agile approach next.

Related: What Is A Compliance Management System And Why Your FI Needs One

Considering How to Implement an Agile Approach in Compliance

If you’re interested in creating a more collaborative and solution-focused approach to compliance in your financial institution, you might want to consider implementing some agile methodology.

To adopt an agile approach, you’ll need to consider:

• How the team is organized.
• How the team makes decisions.
• How the team works to make progress.

As mentioned above, the agile approach relies on cross-functional teams that include leadership, technology, customer success or support, and risk or control. The teams are led by a person who is accountable for the product’s delivery, but that person isn’t really the boss. He is basically responsible for making sure that everything is moving along. In addition, all team members need to trust each other and be committed to the approach. Without trust and dedication to the goal, collaboration and constructive criticism won’t be truly possible.

The team is not organized according to traditional hierarchies, so it doesn’t make decisions that way. In fact, in an agile approach, every individual team member is empowered to have the authority to make executive-level decisions on his own, as long as those decisions are aligned with the team goal. For this to be possible, the team needs to decide on clear goals with metrics that will be used to track success. These metrics will drive decision-making.

Finally, agile changes how the team works together to make progress. Work is all about delivering customer and business value, rather than personal gain or sales. In agile, the idea that “done is better than perfect” is central.

Financial institutions are typically very focused on providing value to their customers and communities, so there is already some alignment here. However, the iterative approach does have the potential to present some risk.

Some key goals that agile can help you achieve include:

• Reducing inefficiencies (and cost).
• Speeding up development and implementation of new solutions.
• Improving collaboration.

In compliance, even though requirements are strict and risks are high, the regulations are constantly evolving. In some cases, adopting agile may allow you to meet the needs of the regulation today, and be more prepared to meet the changed needs tomorrow.

If you’re already actively monitoring, trending, and tracking risk, and implementing changes, you might be in a better position to implement some agile methodology. (Agile is structured, but not in a traditional way.)

That said, agile is a big commitment. To truly implement it, you’d need buy-in from leadership and management. It also requires training.

As the industry moves away from check-the-box compliance and regulators continue to focus on prevention and diagnosis rather than enforcement, an agile approach to compliance becomes more attractive.

Want to learn more about agile? Here are a few external resources that you might like:

• Scaling Agile at Financial Institutions: Lessons from the Trenches (Deloitte)
• Agile Compliance Management Best Practices (Blueprint)

Remember, there are risks to implementing an agile approach. Some institutions really rely on structure and hierarchy to be successful, and agile breaks down a lot of those boundaries. Without a lot of trust and consideration, “agile” can quickly mean “fragile.”

That said, it also has the potential to deliver quality results faster and increase trust and collaboration in your institution.

At the very least, knowing about the agile approach may slightly change your perspective the next time you think about how to address a problem or challenge.