Disruption in the Financial Sector
The financial services industry is one of the most influenced by disruptive technologies. IMD’s biennial study Digital Vortex steadily places the financial industry in the top position of sectors reshaped by digital transformation. Traditional banks deal with ambitious fintech challengers, while customer expectations from incumbents’ digital capabilities continue to evolve.
According to the 2024 Banking Trends Report by KPMG, many legacy financial institutions struggle to keep pace with technological advancements and changing market dynamics. Furthermore, as regulatory pressures and economic uncertainties like inflation and geopolitical risks remain high on the agenda for most CEOs, there is a clear need for financial institutions to continue their transformation.
A growing focus on digitalization underscores the urgency of perpetual transformation – a continuous evolution and adaptation. Technologies such as AI, cloud computing, and robotic process automation are no longer optional but essential for sustainable growth and operational efficiency. Yet, while the potential is immense, the implementation challenges are significant. Many financial institutions face difficulties integrating technologies due to legacy systems that are costly and time-consuming to overhaul.
Leadership Challenges in Times of Change
According to Gartner’s latest survey, growth will remain the top priority for most CEOs in 2024, with 62% identifying it as their primary focus. To achieve this, many embrace business model reinvention, harnessing technologies like generative AI (GenAI) to transform how they create, deliver, and capture value. At the same time, CEOs continue to navigate economic challenges, including inflation, high interest rates, and geopolitical instability, which demand organizational resilience.
GenAI, in particular, is viewed as a catalyst for both growth and operational efficiency, with 77% of CEOs expressing confidence in their leadership’s ability to leverage it for competitive advantage (KPMG). However, this rapid technological shift has heightened the urgency of addressing talent gaps, especially in adapting to AI-driven processes.
Additionally, as noted in PMI’s 2024 Pulse of the Profession report, hybrid work models and flexibility are now also critical for retaining top talent. Closing the persistent skills gap—particularly in AI expertise—remains a key challenge for leadership as they balance immediate performance with long-term workforce investments.
Adapting and thriving in this volatile environment is key to sustainable growth.
The Call for Enterprise Agility
In today’s dynamic environment, adopting enterprise agility is not just a strategic advantage—it’s a necessity. Agile approaches, which focus on iterative development and quick adaptation to change, provide a path to help financial institutions stay ahead of market shifts.
The 17th Annual State of Agile Report found that agile practices can significantly benefit organizations in the financial industry, where customer expectations evolve rapidly:
- Speed to Market: In a highly competitive environment, time is of the essence. According to the 2024 State of Agile Report, 39% of financial services organizations prioritize reducing time to delivery as a key benefit of agile practices. This enables them to respond quickly to regulatory changes and customer demands.
- Customer-Centricity: With 43% of organizations citing customer satisfaction as a top priority, agile allows continuous feedback loops that enable real-time adjustments to products and services.
- Risk Management: Breaking change initiatives into smaller increments allows for better risk identification and mitigation. This is crucial when operating in volatile markets, where uncertainty is present daily.
Another push for enterprise agility comes from the rise of technology disruption and the need to adopt and integrate these technologies quickly. For instance, the McKinsey Technology Trends Outlook 2024 highlights the pivotal role of generative AI in driving efficiency and innovation across industries. Investment in AI technologies has surged, with organizations focusing on leveraging AI for customer service, risk analysis, and process automation. Generative AI, which can produce text, images, and even video from unstructured data, transforms how banks interact with customers. Recently, many banks have integrated AI chatbots to provide faster, more personalized customer support.
Agile Transformation Challenges
However, scaling agile across large, complex organizations is not without challenges. While smaller, more nimble organizations report significant benefits from agile adoption, larger institutions often struggle to embed these practices deeply. The most frequently cited barriers include:
- Organizational Resistance to Change: Nearly half (47%) of respondents of the 17th Annual State of Agile Report pointed to a cultural clash or generalized resistance to change as a significant barrier to scaling agile. This reflects how entrenched traditional practices and mindsets can be, particularly in larger organizations where hierarchical structures and established workflows are harder to modify.
- Lack of Leadership Participation: Around 41% of respondents noted that insufficient leadership participation is a significant impediment to agile adoption. Leaders need to actively support and drive the change, yet many are slow to embrace the necessary transformation, either due to a lack of understanding or competing priorities.
- Inconsistent Use Across Teams: Large organizations often struggle with inconsistency in how agile is applied across different teams, with 30% of respondents citing this as a challenge. This inconsistency can create silos and impede collaboration, making it difficult to scale agile effectively.
- Legacy Systems: For many large organizations, legacy systems are a major obstacle to agile adoption. Approximately 46% of respondents reported that mixed system environments force companies to adopt approaches half-way to agile practices, which can limit the flexibility and speed agile methodologies aim to provide.
- Lack of Training and Education: 27% of respondents identified a lack of sufficient training and education around agile practices as a barrier to successful scaling. This reflects the need for continuous upskilling to ensure teams are equipped to handle new ways of working.
For organizations in the financial sector, the challenges to scaling agile are often exacerbated by stringent regulatory requirements and a reliance on legacy technology. The need for a digital transformation often drives agile transformations, but they also demand a high degree of compliance and risk management.
The Need for Reskilling: Building a Future-Ready Workforce
Adopting new technologies, reinventing business models, and continuously elevating customer experience requires skilled and empowered teams that are set for success with change initiatives to support their organization strategies.
As the need for enterprise agility grows, so does the demand for a workforce that can navigate multiple change initiatives and choose the best-fitting approaches, tools, and methodologies to deliver them.
The PMI 2024 Pulse of the Profession Report emphasizes that organizations that invest in upskilling are better positioned to adapt to technological changes. This investment is not just about teaching new technical skills but also fostering a mindset that embraces continuous improvement.
The rise of hybrid project delivery methods means that project professionals need to be fluent in traditional, predictive project management practices and agile approaches simultaneously. This is where reskilling becomes vital.
Practical Steps for Upskilling and Reskilling Toward Enterprise Agility
- Develop a Learning Culture: The 2024 State of Agile Report points out that companies that succeed in agile adoption prioritize a culture of continuous learning. This means creating employee learning opportunities through formal training programs and informal peer-learning sessions. At Project Management Institute, we run programs specifically focused on the middle management layer, the often-overlooked groups of stakeholders in enterprise-wide transformations. These programs, we call them Transformation FORUM and Transformation READY Labs, offer a peer-to-peer exchange of ideas and experiences from different parts of our organization while learning and practicing change management techniques to set their teams for success and maximize their impact towards enhancement of our strategy.
- Tailor Agile Skill Set Training to Roles: Different roles require different skills. While technical team members might need in-depth training in AI and DevOps, leaders need training on fostering an agile mindset and leading change effectively. Offering tailored learning paths ensures that employees receive the right skills for their responsibilities. In one of my previous agile transformations, we could not find a sufficient agile leadership development program, so we created it ourselves. We surveyed our leaders to understand which skills they consider essential to drive agile transformation and support their teams successfully. We structured these skills into three buckets – Agile Mindset, Business Agility, Agility for Teams: Ways of Working – and created competency-based development sessions to support their abilities to drive the change.
- Leverage Hybrid Learning Models: The PMI 2024 Pulse of the Profession Report highlights the effectiveness of blending in-person workshops with virtual training sessions to reach a broader audience. This approach ensures that employees can learn in ways that suit their schedules and preferences, fostering greater engagement. Organizations may also utilize learning setups such as running Communities of Practice to share knowledge and experience with employees who share the same crafts, offer mentoring programs, and provide opportunities for employee networking.
- Create Career Pathways in Agile: Establishing clear career pathways helps retain talent. Organizations that map out roles like agile coaches, product owners, and scrum masters can attract and retain top talent by showing a commitment to their career growth. C-suite executives may further support talent retention by acknowledging the importance of project and agile professionals in strategy execution. At PMI, we organize regular executive reviews of our key change initiatives that offer interaction, and project and agile professionals with C-suite, to learn and fully understand the big picture and strategic imperative behind the changes they implement.
- Focus on a Growth Mindset: Reskilling is not just about acquiring new skills; it’s about fostering the right mindset. The 17th State of Agile Report found that organizations with a growth mindset culture are significantly more successful in scaling agile. Leaders should encourage teams to view challenges as opportunities to learn and iterate while at the same time fostering psychological safety, open dialogue, and transparency to encourage teams to ask questions and seek to see the big picture.
Adapting to Thrive in a Changing Landscape
The financial industry faces multiple challenges —from digital disruption to regulatory pressures—and requires a new way of thinking and working. Enterprise agility offers a path forward, enabling organizations to respond quickly to changes, deliver value to customers, and innovate at scale.
Financial institutions can build a workforce capable of navigating the complexities of today’s business landscape by investing in reskilling and fostering a culture of continuous learning. The focus should be on equipping employees with the skills to leverage new technologies while fostering a mindset that embraces change.
In a world where uncertainty is present daily, those who adapt thrive. By embracing agile transformation and investing in their people, financial institutions can position themselves for success in the years to come.
