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Payments Innovation Down Under, Organized By Tribes And Squads

Member of the tribe? Or maybe part of the squad?

If both terms sound out of place in banking or payments and more at home on fields of battle, then focus a bit on just what innovation really is — a constant back and forth, a tussle between ideas and idea-mongers.

For one large bank, Australia’s ANZ Banking Group, thinking small is part of a new path forward, where small teams (aka tribes and squads) tackle big ideas, previously the province of large IT departments.

Small carries with it the connotation of agility, especially useful when it comes to innovation, where information technology in banking must move from “a catch-up” mentality toward a more cutting-edge approach. It’s a do-or-die tactic, lest traditional firms be left in the competitive dust by nimble FinTechs and other tech-savvy challengers.

ANZ, specifically its Australian arm, has been busy crossing the Rubicon from large banking play to startup culture. It’s a shift that was dictated earlier this year when ANZ announced in May that the Australian unit would embrace “agile” team structures, perhaps more commonly associated with companies such as Netflix and others.

The overarching aim has been to reduce hierarchies extant within the bank and to respond to competitive threats via self-directed groups that collaborate to bring new products to market and shorten product development cycles.

Thus, the fragmenting of the Australian operations into roughly a dozen and a half “tribes,” comprised of a total of 150 “squads,” with each squad staffed by 10 employees.

In an interview with PYMNTS’ Karen Webster, Chris Venter, Technology Transformation head at ANZ, said that an interdisciplinary and multidisciplinary approach is helping to break down siloed thinking at the roughly 180-year-old institution.

The shift is not entirely unexpected. As Webster noted, Australia is well-known for being at the forefront of digital innovation when it comes to banking (and beyond), and Visa stated in its own report on innovation readiness, viewed from a cashless perspective, that Australia ranks high on the list. That’s due, in part, to the broad acceptance of contactless cards and other paper currency-free conduits. Venter said that ANZ was the first to launch in the country with Apple Pay, Android Pay and Samsung Pay — and recent initiatives have embraced payments across Fitbit wearable devices.

The tribe-and-squad restructuring, said Venter, is devoted to a “payments- and customer-focused mission,” where “we are almost treating ourselves like small IT organizations that are self-sufficient across things like data, infrastructure as a service, payments … those teams are to supply the services to the squads in a way that makes them more effective.”

Thus, with autonomy and agility in place, the bank announced a little restructuring: Managers will be replaced with coaches and product owners, with cross-functional dialogue part of the standard operating procedure (tribes are broken up across customer experience, engagement and operations), and speed of time to market for new financial products will be significantly shortened.

“In the past,” Venter told Webster, “you would have to plan a very long project; you’d have to, up front, decide how much investment you’d have, what the business case was, and there was a lot of pressure on people to get as much as they could in and get it perfect.”

Following the advent of the agile development model, he continued, “it is much more an iterative mindset, which is ‘We’ve got an idea; let’s try it, and we know we can get it tested and build something out to market relatively quickly.”

How short a development cycle? Pretty short, Venter said, who commented during the conversation with Webster that the company is seeing redevelopment across six-week timeframes, with an allowance, of course, for failure built in (and here failure is no dirty word). Trial and error and an iterative mindset allow for new features, a little test of sorts, to take the pressure off big projects amid “more flexibility to listen and adapt to … customer needs” and tweak products on the fly.

Rather than going about the process through a traditional model that might pony up a budget and fund it first, Venter said the tribe-and-squad approach is one where “we think [about how we might] need to spend roughly this much on customer experience-related activities, [such as] home lending and sales.” The newly fashioned divisions get an allocation based on their backlog for the quarter, and project focus is determined on what they think is going to deliver the most value, with a view on both maintaining and improving current product offerings and giving rise to new products.

Such agility is paramount in a digital world, where “we don’t know what the next disruption is” in a financial industry that “is changing rapidly, with competition from different areas than in the past … and regulation is higher than ever,” with new requirements tied to open data standards, said Venter. This changing landscape demands that constant testing must be part of any movement to embrace innovation.

He noted that recent and continuing efforts have centered around voice biometrics, artificial intelligence and chatbots, with an eye on bringing new products to market next year.

Many financial firms would like to adopt and adapt to an agile model, noted Webster, but getting started is tough. The advice Venter offers banks looking to become digital disruptors on their own? “You need to really be clear: What’s the problem that you are trying to solve and why? You have no choice but to change.” And, he cautioned further, “make sure you’ve got that buy-in on the need to change from the top [of the organization]. Without that, you are not going to be successful.”

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