The task ahead

What programme management challenges does the notoriously complex world of financial services present? Project gets the inside story from Karl Williams, financial services practice lead, and David Arrick, management consultant, at project and portfolio management consultant, at project and portfolio management consultancy Pcubed

Large-scale transformation programmes have been a major priority for the banking sector since the financial crisis struck. Why?

Karl Williams: Before the crisis, banks were focused on growth. They were expanding in new markets and acquiring new businesses, especially in Asia-Pacific and South America. But once the crisis happened and regulation tightened, they moved towards strategically rationalising products, systems and people.

David Arrick: Every decision that banks have made, and every programme they have kicked off, has been around cutting operational costs and finding more effective and efficient ways of working. But that is not a particularly strategic way of thinking, so the next raft of programmes and projects is likely to be more forward looking.

What particular challenges are associated with bank transformation programmes?

DA: Large-scale change involves large-scale investment, and the two don’t sit particularly well with the procurement and finance teams that are funding these programmes. There is pressure on teams to submit effective business cases that set out the detailed benefits that the programme will deliver.

KW: Banks have been hit by some pretty profound regulatory changes. A few years ago, 70 per cent of a bank’s change budget was put into regulation in some cases. Even now, I suspect it is still somewhere around 50 per cent.

DA: A lot of the programmes of work are focused on the cloud automation of activities like testing, and creating more flexible ways of working. When banks want to put customer data in places like the cloud or digital infrastructure that crosses multiple geographies and national boundaries, they come across
problems with regulations that kick off a stream of other activities.

I was recently involved in a large-scale assignment that involved a bank outsourcing all of its infrastructure operations to one external provider. When the programme went through its initiation and delivery phases, we had to get regulatory approval from 34 individual regulators. That probably added an extra 200 days to the normal project timeline.

For this outsourcing engagement, we also needed to change the legal entity structure – the intra-group agreements that outline their regulatory commitments – for every single legal entity within the bank. This bank was structured into more than 100 legal entities, which sat within five regions, which sat within eight top-level intra-group agreements. The stakeholder management challenge was particularly tough to manage.

How is the digital revolution impacting the work that you do with financial services clients?

KW: It means people want to deliver faster, and are delivering faster, through approaches such as scaled agile. For example, a major mutual bank created a mobile app that has Touch ID, essentially using a scaled agile premise.

But, generally, we have found that, while banks want to take an agile approach to project management, they are also usually forced to take a traditional waterfall approach. So, in major programmes, they have got to do both well. There is a real debate about how banks can scale their project and programme management capability to deal with both, as well as manage the challenges of the programme itself.

Are there any elements of project management best practice that really matter in financial services?

DA: There are some relatively strict requirements around confidentiality. In a number of cases, no information – written and verbal – can leave the programme and project rooms.

Also, it is fair to say that financial services programmes tend to be global. We usually complement our teams in London with teams based in other financial services locations, such as Frankfurt, New York and Singapore.

Now we’ve had more clarity on Brexit, how do you expect it will affect project management within financial services?

KW: A lot of major change programmes within banks are actually run from London. There are two reasons for that. One is that there is a lot of talent in the UK and in Europe; the other is the time zone. London is in the right place between New York and Asia-Pacific, so we think that it will continue to be one of the key hubs from which banks look to manage change.

Is Brexit going to lead to extra work for project managers?

KW: I think it will. European law will effectively become disaggregated from UK law. Banks will have to deal with changes to money flows and legal entity structures, and the wider implications around labour mobility.

What role will artificial intelligence (AI) play within financial services?

DA: Banks have a lot of unstructured and unmanaged data swimming about in their servers, which is a big problem for them, so I think we are going to see a lot of feasibility studies for the use of AI in data categorisation. We will review how we can engage and support our clients with that from a programme management perspective.

How do you see project management in financial services evolving over the next 10 years?

KW: The role of project management is changing because people want to deliver faster in a more collaborative manner. Whether it is scaled agile or some other form of agility, it will fundamentally change project management and the role of the project management office (PMO). We have invested heavily in scaled agile because we believe there is going to be an increasing need to manage in that way. We’ve also invested a lot of time in understanding how agile and traditional waterfall work together.

DA: The role of the PMO tends to be quite fragmented at the moment. In any given organisation, you have some project teams that have their own individual PMO and their own staff team. But we are going to see a centralisation and consolidation of those PMOs. They will probably become a centrally aligned service that is more akin to a portfolio function. We are aiming to offer our clients project management and PMO specifically as a managed service.

KW: We have provided a managed service for Airbus for 15 years, supplying project managers into its major programmes. Recently, banks have also asked us to pitch to provide an outsourced PMO service.

Banks want consistency of project management quality – especially if they have used a proliferation of contractors and found they can’t retain intellectual property or necessarily guarantee consistency. Having dealt with a lot of change over the past five years, banks recognise the need for improved quality in managing change at all levels of their organisation.