Three tips for agile planning in 2020 BANKING

strategic planning meeting
Ryan Myers -

Ryan Myers

August 21, 2020

Banking executives should take a page out of the software industry playbook and use an agile approach to planning.

Once financial institutions have learned something in the first half of 2020, they need to be nimble enough to adapt to changes in the short term.

Our understanding of the pandemic and its economic consequences has improved significantly in the last few months, but we are still completely unprepared for proper long-term planning. For context, FedEx has some of the best data and forecasting analysis in the world, but doesn’t seem confident enough to come up with a profit forecast for a year that’s already halfway through.

The wide range of possible outcomes for the next 12 to 18 months makes me look back on lectures from my computer science professors, who stated that the concept of “agile software development” has gained popularity because it has achieved better results in less time. Part of the appeal, as written in a famous manifesto, was the value of “responding to changes that follow a plan”.

It is wishful thinking at best to have 10 or more executives in one room for a full day to work out long-term strategic plans. Rather, financial institutions should take a page out of the software industry’s playbook and adopt an agile planning approach. To that end, executives who employ these three agile strategic planning principles in this year of uncertainty will be in the best possible position when the fog of war finally clears:

1. Ask yourself difficult questions

Aside from the fact that the regulatory auditors expect a serious and ongoing planning effort, there has never been a more important year for strategic planning. It is important to proactively answer difficult questions and ensure management is supported by the board as key financial metrics. First, here are questions that apply to just about every financial institution in the country:

  • How has the pandemic affected existing strategic priorities?
  • What do the profits look like in a recession with margin pressure, a lack of consumer lending, looming mortgage debt and increasing loss reserves?
  • Can current digital and other remote capabilities support growth and a competitive customer experience?
  • How will our board of directors support critical investments in the face of falling profits and a shift in capital management priorities?

2. View planning as an ongoing conversation

One principle of agile software development is: “The team regularly thinks about how it can be more effective and adapts accordingly.” This is particularly important for two reasons. First, the uncertain economics (local locks, industry impact variability, etc.) require multiple conversations and increase the likelihood of multiple micro-adjustments as part of a plan. Second, virtual planning meetings have become common, but difficult to maintain for a full day. Do everyone a favor and split the agenda over several sessions. Each meeting can have a specific focus and support analysis and expected results. Not only does this keep engagement high, it also forces the team to be accountable for follow-up actions and reinforces ongoing conversation.

3. Use new tools

Even the NFL Draft – a notoriously overdone extravaganza – has become a virtual format this year. In doing so, the NFL shattered attendance records, took the opportunity to explore new opportunities and identified improvements that will drive it forward. Cornerstone Advisors has also taken advantage of virtual tools. Software-enabled group breakouts, for example, enable seamless collaboration. They also make it easier for moderators to join in conversations without looking for teams who think the resort’s pool is the best hangout spot (not that I speak from experience). Another tool is real-time polling, with which the mood and prioritization of the participants can be measured and displayed confidentially. These tools make hybrid sessions an attractive option for in-person and virtual participants.

Focus on getting stronger

Agile planning through shorter, more frequent meetings may not be required in the post-pandemic “new norm”, but the usual planning cycle is clearly insufficient. As much as I miss strategizing world domination (or at least the dominance of community banking) with a room full of intelligent business leaders, we need an approach that allows flexibility and rapid decision-making. Fortunately, most of the long-term banking priorities remain and in some cases have even been sped up. However, community banks would be wise to shift resources to double operational efficiency and digital investment. This is the industry’s best opportunity to hit the proverbial gym and:

  • Get familiar with industry optimization
  • Digitize the customer experience and back office operations
  • Increase your customers’ self-service capabilities to lower the average cost of interactions
  • Transform the contact center from a support capacity into a growth center focused on producing new businesses

Maintain agility that goes forward

Take into account the sluggishness the typical financial institution has faced in the past when carrying out a large project. Now think about how much has been achieved in such a short time this year. Entire companies were set up to work remotely in a week. Lending for the paycheck protection program was held out of nowhere within weeks. Customer documents have been converted so that only electronic signatures are required within a few days. How could so many slow organizations quickly implement major changes that had previously taken months?

  • Executives had a tight list of priorities. Teams of the past didn’t grapple with a long list of projects that had exceeded their execution capacity. Low priority initiatives were pushed into the background until high priority tasks were completed.
  • The staff had a great understanding of the priorities. Everyone in the company knew why these projects were important and understood the results they wanted. They also understood the barriers to success that accelerated decision-making and improved the quality of the solution.
  • The teams were ready to act quickly and adapt faster. The institutions were more willing to come up with an incomplete solution as it was a dramatic improvement over the current option. More importantly, there was the expectation that incremental improvements could be made – quickly after a product with minimal viability became available.

Agility has been necessary for basic survival in the past few months, but it would be wasteful not to maintain the newly developed execution muscles. An agile approach to planning this year will focus on getting out of a pandemic-triggered recession stronger than before. Most importantly, bank leaders do not limit these behaviors to times of crisis, but rather apply what they have learned as they establish and maintain a nimble planning cycle for the future. The results will put GonzoBankers in a far better position to achieve long-term goals.

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