An Agile Approach to Compliance

26th January 2023

Agile Compliance

There is a misconception that Financial Services can struggle with implementation of Agile, as they need to consider the risk within a highly regulated market.

Surely, this is in fact one of the key principles of Agile: "know your risk and proceed"? I can hear the doubters already…but wait!

As an example of how Financial Services have always needed to apply Agile principles, consider adherence to regulations.

New regulation is never a surprise, new bills need to be passed, there will be consultation and a clear timetable for introduction, which usually takes years. Not sounding very agile I know, however the consultation phase can generate last minute "tweaks" which, in terms of system change, can be difficult to react to.

Companies will often try to get one step ahead, to ensure they can deliver on time, accepting an ‘at risk’ mindset. Then when the ‘tweaks’ are published agility would commence…

With this mindset already smouldering, driven by necessity, Agile Governance is a methodology that is becoming increasingly popular in the financial services industry as it allows for more flexibility and responsiveness in decision-making. Agile Governance is a way of adapting the principles and practices of agile software development to the broader context of an organisation or enterprise.

Agile Governance adoption is defined by "Agile Compliance". This is a way of complying with regulations while remaining more flexible, responsive and adaptive to changing market needs. This approach of agile governance and compliance allows financial service providers to quickly identify and respond to regulatory changes, reducing the risk of non-compliance, and increasing the speed of product development.

However, it is important to note that Agile Governance is a cultural shift and it needs to be adopted in a holistic way by the organisation, with an active involvement of all stakeholders. Also, there might be limitations on fully adopting Agile Governance based on the nature of the business, and it should be guided by the specific context of the company.

Agile Compliance strategy

If Agile Governance and Compliance is part of your strategy here are some key steps and tools to think about as you begin the change process:

Creating a flexible and adaptive governance structure:

This can include implementing existing frameworks, such as the Agile Governance Framework, that can accelerate decision making by allowing teams a degree of autonomy with guardrails to ensure alignment to overall objectives and regulations.

Incorporating regulatory requirements into the agile development process: This can be done by including compliance and legal teams as part of the agile development team, and ensuring that regulatory requirements are clearly defined and incorporated into the product backlog.

This Agile approach of “Shift Left” on regulatory requirements ensures that these are included from the start and built-in to the product roadmap. (Some people have even coined the term RegOps for this approach!)

Implementing continuous compliance:

Regulatory change is rarely something that comes out of the blue. Regulations have to go through a range of consultations and approval stages before being implemented. Keeping abreast of these through industry events, webinars and regulators social media and press releases would likely be a function of the regulatory teams within the organisation.

It is therefore vital that strong links are built between the risk/compliance teams and the change/transformation teams to ensure alignment on regulations is part of the change process. By monitoring and sharing regulations in real-time, financial services organisations can quickly adapt to changing requirements and ensure ongoing compliance.

Leveraging technology:

Strict data privacy laws and ever-increasing amounts of enterprise data make maintaining compliance difficult for organisations. Automated compliance tools and artificial intelligence can help organisations identify and address regulatory issues quickly and efficiently, eliminating the risk of human error and streamlining processes to maintain and promote compliance.

Encouraging a culture of compliance:

Creating a culture that values compliance as part of the agile development process can help ensure that regulations are taken into account throughout the development process. Company-wide education on the consequences of non-compliance in events such as Lunch and Learns, Compliance-based quizzes and guest speaker appearances can help embed a culture of collective responsibility

Incorporate testing and validation of regulatory requirements:

This can be done by testing the product or service against the regulatory requirements and validating it before release.

Summary

Many of the above considerations require the integration of Governance and Compliance within existing Agile teams. Bringing the compliance lens to these existing multi-functional teams helps to ensure that cross-business requirements can be more easily understood.

The product owners, developers and testers begin to consider the needs of governance and compliance within their product roadmaps, code and test plans and those working in compliance and governance can start to see how their checks and balances can still work in support of the businesses drive to iterate and release new functionality to customers.

Financial Services organisations are finding that by implementing these strategies, they can continue to deliver customer benefits at pace by becoming more agile in their approach to regulatory adherence while still maintaining compliance.

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