Fintech Innovation and Risk Management
Transcript
STEVE HENDERSHOT
A continuous cycle of innovation and disruption within financial services means that project leaders in the industry must prepare their teams to adapt in the face of unexpected challenges—while also keeping one eye open to spot the next big opportunity.
NARRATOR
The world is changing fast. And every day, project professionals are turning ideas into reality—delivering value to their organizations and society as a whole. On Projectified®, we’ll help you stay on top of the trends and see what’s ahead for The Project Economy—and your career.
STEVE HENDERSHOT
This is Projectified®. I’m Steve Hendershot.
Thanks to innovations in payments services, digital currencies, online lending and more, fintech is reshaping the financial services sector—and it’s doing so by delivering genuine value to customers. In 2022, for example, 93 percent of fintech users in the U.S. and U.K. reported receiving real benefits from using financial apps, according to a new survey from financial services company Plaid, conducted with The Harris Poll. That’s up from 90 percent in 2021 and 84 percent in 2020.
That means there is pressure on project teams from both established industry giants and fintech startups to push the bar forward, and today we’ll speak to two project leaders who are trying to do just that.
We begin in Toronto, where Ashley Butao is a project manager at one of North America’s largest banks, Capital One. Projectified®’s Hannah LaBelle asked Ashley about how she infuses innovation and flexibility into project teams that also need to be mindful of privacy, regulatory concerns and risk management.
MUSICAL TRANSITION
HANNAH LABELLE
To start, what are the biggest disruptions you’re seeing in the financial services sector?
ASHLEY BUTAO
I would say digital payment systems—so the emergence of new payment solutions like Apple Pay and Amazon Pay. Another one is the emergence of gig or seasonal workers. Now with COVID and a lot of things switching to remote [work], you have a lot of folks working more of these like gig/seasonal type of work, which ends up posing I would say a new problem for credit decision modelings and income verification.
Even the adoption of big data and cloud computing. Right now, banks can open an account online for customers end to end, versus back in the day when you need to go to a bank in person to provide all of your documents and confirm who you are.
Another one is the democratization of financial services. So there’s a lot of challenger banks that you see on the markets these days where they can acquire a customer at about [one-] third of the cost of a traditional bank, but still provide the same services that a legacy bank would provide. It also allows for more accessibility for folks who can’t necessarily go to a bank branch. A lot of these challenger banks are online-only, and you could do everything through a mobile app.
Another one would be financial inclusion in emerging markets. So you have a lot of fintechs that are popping up in countries that are normally underbanked.
HANNAH LABELLE
So in the face of all this disruption—including shifting privacy regulations, inflation, evolving consumer preferences and new technologies—how do you infuse flexibility into your project teams so they can adapt when necessary?
ASHLEY BUTAO
I think it all starts with creating a psychologically safe space for team members and empowering your team members to raise risks and issues without feeling like they’re going to have a reprisal from other team members. Or they need to worry about managers or bosses who are going to say, “No, we [have] got to deliver it now.”
It’s also planning for change. So ensure stakeholders are aware that “Hey, things are going to change, so we need to account for that.” While you can have a goal that’s 18 or 12 months in advance, when it comes to actually planning out work tasks, embrace planning it out in small chunks. That way if something goes wrong, you can adapt faster and you can learn quicker.
I also embrace learning by doing. So let’s try it now, and if we fail, it’s okay. We’ll try something new. It also provides for intense customer collaboration and feedback with your stakeholders.
HANNAH LABELLE
Your teams focus mainly on identity verification and other technology projects, so you’re no stranger to agile approaches. How do you use them in your projects, and how do these approaches impact your success?
ASHLEY BUTAO
We definitely do use agile planning in our projects. We actually plan work within two-week sprint release schedules. And then overall business goals, we’ll plan those in program increments of six weeks. And then within those, we have biweekly sprint demos for stakeholders.
Especially in the fintech industry when dealing with new technologies—even AI, blockchain—it allows us to try lots of different things. And if it means failing quickly, I mean it’s a good thing. It also allows us to answer customer changes. When you’re dealing with end-user customers, you could have people that are saying, “Oh, I want this feature.” But by the time you build it, sometimes what they want is no longer valid anymore. And another big thing in fintech is also regulations. There’s always changing regulations and consumer protections. So when you build it in an agile way, and you’re building in small chunks, it’s very easy to respond to changes that need to be made.
There’s so many different flavors of agile, but the core of it is focused on delivering value after each sprint. So as long as agile teams are able to respond to change and successes and failures quickly, it creates a more efficient process and a lot more collaboration between all the teams involved.
HANNAH LABELLE
How do you balance the need for innovation with the need for risk management in these projects?
ASHLEY BUTAO
I think it’s really understanding your organization’s risk tolerance, being aware of it and making sure you’re acting within your risk appetite. We have lots of different risk and compliance partners and forums; risk and compliance experts are saying, “Hey, have you thought about this? Have you thought about that?” But when you want to balance it with innovation, you have got to experiment. That’s my opinion.
For example, if you have a project, you want to launch a new credit model, of course it is a risky thing. So I think one way to balance innovation is, “Hey, why don’t we build this service in a way where we can turn on and off our new function?” Let’s turn it on for maybe a week, collect some data to see what we get, and then we can turn it back to our old service, and then we can analyze the data. Does the data show that the return on investment outweighs the potential risk? Even from a tech perspective, does it show that your tech implementation is working the way that it’s supposed to? So while it is, of course, important to think of risk, you actually have to try it to see if what I’m thinking about risk actually translates to the real world.
HANNAH LABELLE
How can bringing these risk experts into the project early and often help down the line?
ASHLEY BUTAO
The worst thing is you have all of these plans, and you’ve lined up all of these vendors. You have all of your resources allocated. You hired a bunch of people for your project and then you get to execution, and you bring in these risk experts and they say, “That’s definitely not within our risk appetite.” So I think it’s important to engage them once you have just even your general design. Engage them early and say, “Hey, do you see anything wrong with this design? Let’s take into account what you think before we actually start building and coding and implementing.”
HANNAH LABELLE
So how has digital disruption changed the risk and threats teams need to manage when they’re executing and delivering projects in financial services or fintech?
ASHLEY BUTAO
Gone are the days where the only risks and threats to projects are, say, a vendor not delivering on time or having to deal with scope creep. Now with digital disruption you see threats on, say, for innovation and speed, how do we ensure our projects will still be innovative by the time we go to market? Laws and regulations are a big one because they’re constantly changing: How do we ensure we get to the market fast enough while still being compliant? Privacy and data security: How do we ensure customers’ data is kept safe and secure? While we’re trying to innovate, so are bad actors and hackers. They’re also innovating on their ways to get into your system.
For example, technology like digitization, automation and AI, I mean, how do we ensure we automate and digitize our processes quick enough but also remain compliant and safeguard customer data? To manage these types of threats, the biggest thing is data-driven decisions. Let’s come up with various scenarios and outcomes to see how much and what the impact of these threats would be. Let’s use market research to understand trends and to see where innovation is moving towards.
MUSICAL TRANSITION
STEVE HENDERSHOT
The secret to fintech’s rise isn’t just the emergence of new technology but the development of tech products that genuinely improve customer interactions with financial systems around the world. I spoke with Stanley Jacob, who is the chief executive at Stanbic IBTC Financial Services Limited and also vice president of the Fintech Association of Nigeria in Lagos. I asked Stanley how he ensures that teams are innovating in a customer-centric way.
MUSICAL TRANSITION
STEVE HENDERSHOT
You’re working in an environment that’s constantly changing due to innovation and fragmentation, and the potential is there for a new fintech to pop up every month and compete with you in one line of business or another. So how do you keep your team ready to adapt and still deliver value fast?
STANLEY JACOB
I believe that for teams to be able to adapt well, adoption of agile practices remains sacrosanct. You should be able to turn out solutions, you should be able to turn out platforms and value delivery as it comes. You should be able to do your iterations and get customer feedback, make necessary changes and keep running.
I think that the team needs to be constantly encouraged to innovate, and when you talk about getting the team ready, we can’t get that complete discussion without bringing in the topic of flexibility. How do we get them to be flexible enough to be ready for change? How do we get them to be flexible enough to take on new regulation, new technology, new legislation? To respond to this, knowledge exchange is very critical. Teams need to regularly network with regulators, with customers, leadership and other stakeholders. We must create an atmosphere that allows team members to contribute to knowledge building.
STEVE HENDERSHOT
Within this agile framework, what are the inputs that the teams need to innovate effectively? Is it customer experience feedback? Is it monitoring the marketplace to see what else is out there? What do teams need to make sure that they’re innovating in the right direction?
STANLEY JACOB
Customer experience feedback is very critical. What you find out now is as we move away from human touch in terms of service delivery, we no longer advocate person-to-person, human-to-human interaction to have service delivery. We are seeing more digital service delivery. It’s also important to get the feedback from the customer that you have served remotely.
STEVE HENDERSHOT
What skills and experience do project managers need to thrive in financial services and fintech?
STANLEY JACOB
A typical project manager or a project leader should, first of all, have a very clear understanding of regulation and legislation. No matter how innovative, how interesting or fantastic the solution you want to build might look, one thing stands out—it must fit into the regulation of that country. Who is the regulator? What is the regulator saying? Are you in conformity? What does the law say about what you want to bring in? A good project manager should know what the right thing is, not just what they think, especially when it comes to delivering projects and trying to ensure that you are well-aligned with regulation and legislation. There are no emotions, no assumptions. It’s always good to know what it is. We’ve seen businesses lose huge amount of funds because this point wasn’t clarified.
Secondly, design thinking is very important. How do you design for the customer? Customer centricity is critical. So we need project leaders, project managers that understand design thinking. Who are you designing for? What are you designing? Why are you designing it? That way you know that you’re building a solution or a product that is fit for purpose. We think that the project leaders and project manager must add more value beyond just executing projects. They should also add value to the ideation, add value to the design.
STEVE HENDERSHOT
How are fintech projects affecting the financial services industry as a whole? What do you think will be the legacy of this wave of project innovation in the sector?
STANLEY JACOB
I think that the impact will be financial inclusion—getting these services in the hands of the people that are excluded, getting more services in the hands of people that are underserved, and also giving better options to those people that are currently served or included in the ecosystem. It is going to lead to better competition. We are looking up to the stage where fintechs are going to give us what we will say [will be] reduced pricing to the customer because we expect that as more solutions come into the market, there will be competition for the soul of the customer. The pricing will come down. There will be more options and alternatives. That is where we want to go to as the next stage.
MUSICAL TRANSITION
STEVE HENDERSHOT
As innovation and technology continue to remake the financial services sector, it falls on the leaders, teams and projects within the industry to ensure that its next era is not only more efficient but also better at helping more customers access more services to greater effect—all while maintaining high standards around privacy and security.
NARRATOR
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