In the financial sector’s dynamic realm of project management, agility has become the number one buzzword. It has emerged as a beacon of innovation, promising adaptability. On the other hand, critics say, the concept is nothing more than a smokescreen. It comes in handy when a project is not well structured or does not deliver on deadlines. But as always: The reality lies between.
Drawing inspiration from real-world encounters, this working paper embarks on a journey to explore the intricacies of large-scale agile project management in regulated environments. It aims to scrutinize the strengths and weaknesses of agile project management when applied to projects of significant magnitude and complexity.
Thereby the clash between flexible and rigid becomes apparent: agile can deliver – and thrives on – quick adaption but needs to function in a clearly set framework with set deadlines. This holds especially true in the financial sector. As the guardians of sensitive financial data and providers of payment flows, banking institutions face a unique set of challenges.
The finance sector must move fast, innovate smart, and adapt quickly – without breaking the systems that keep it running.
Whilst managing and processing highly sensitive data, financial institutions must adapt to fast-paced rapid technological advancements. This not only counts for internal processes, but also for the market itself where digitalisation boosts competition.
At the same time, regulations for financial institutions are extensive and have been severely constrained following the financial crisis of 2008 which highlighted dangerous gaps in the international regulatory system. As a direct lesson, regulatory standards were heavily enforced at both the global and European levels. Today, various national and European laws and regulations govern the way banks and financial services providers are supervised.
As part of the Eurozone, the regulation and supervision of banks in Germany takes place within the European Central Bank’s (ECB) Single Supervisory Mechanism (SSM). The SSM Regulation defines the nature and scope of the ECB’s duties and governs its cooperation with national competent authorities such as the Federal Financial Supervisory Authority (BaFin) and the Deutsche Bundesbank (BBk).
Under the oversight of the ECB, they are responsible for the supervision of the German banking and financial services system. Currently, the BaFin supervises around 1740 banks and 674 financial services institutions.
The BaFin monitors financial institutions on an ongoing basis. As part of their commitment to compliance, they must meet the Minimum Requirements for Risk Management (Mindestanforderungen an das Risikomanagement – MaRisk). Institutions must be able to identify, measure, control, manage and monitor risks.
Subsequently, the MaRisk and the Banking Supervisory Requirements for IT (Bankaufsichtliche Anforderungen an die IT – BAIT) substantiate the legal requirements of section 25a of the KWG (Banking Act). The BAIT spell out the technical and organisational requirements for IT-systems, including contingency plans.
As the outsourcing of services to third parties becomes more important, the BAIT also defines how to establish the external procurement of IT-Services.
BaFin has all regulatory decision-making powers to fulfil its role as supervisor. Measures to avert threats range from written warnings, costly fines, the withdrawal of a banking license and as a last resort the closure of a business premise.
These regulations set rigid boundaries for financial institutions. Thus, a framework setting the backdrop for a highly complex environment to steer projects, which may span over a period of several years, is needed. While stakes to meet regulatory demands are high, changes, as stipulated by frameworks such as the European Union’s Digital Operational Resilience Act (DORA), must be anticipated and, if relevant, incorporated into the project design and scope.
Waterfall vs. Agile: Two distinct methods, two fundamentally different mindsets – understanding their strengths and choosing the right approach for long-term Project Success.
Large change the bank projects, often massive in scale, require meticulous planning with clear cut deadlines. For decades the Waterfall model has been the go-to approach with origins traceable back to the early 1970s.
Building on clearly defined stages of management, each project-step requires a deliverable from the previous phase to proceed. This method is best conceived for projects where the result is clearly established before starting. As the project goals are specific and clearly defined out from the start, the project’s timeline and budget are fixed. Once the project plan is established, frequent feedback or collaboration with the client is not needed, apart from defined deliverables or milestones along the way. From a Project Management Office (PMO) perspective, this makes life easier, as planning and communication with stakeholders follows a clear path. Predictability is the key ingredient for the Waterfall model.
Even though the Waterfall model has its merits, Agile project management has emerged as a transformative force. It forms a departure from traditional, linear methodologies and emphasizes iterative development, collaboration, and adaptability.
The roots of Agile can be traced back to the Agile Manifesto from 2001, a seminal document crafted by industry experts who recognized the need for a more responsive approach to software development. Agile project management is based on an iterative way to delivering a project from end to end.
During this period each iterative step – or cycle – is composed of incremental steps towards the completion of a project. Iterative approaches build on velocity and adaptability. One of the aims of an agile approach is to present benefits (parts of the final “product”) throughout the building process rather than waiting for a final release at the end. Thus, instead of waiting until one stage is finished, the project team can adjust and enhance their “increments” as they move forward.
Since its creation, Agile has transcended its origins in software development and found applications in various industries, including the finance sector. The adaptive nature of Agile methods align seamlessly with the unpredictability, inherent especially to IT- and cyber security projects, where requirements can shift rapidly in response to emerging threats and new standards.
Balancing the need for agility with the reality of deadlines is a constant tightrope Walk – how to master both without compromising on quality.
Successful initiatives need to take the dynamic advantages into account but also work against non-flexible demands and deadlines.
Such initiatives therefore call for a delicate balance between agility and structure, which may often contradict one another. The widely established waterfall model, with its linear and sequential approach, seems like a relic in comparison to the dynamic and iterative nature of agile. However, the clash arises when these two methodologies collide.
Waterfall demands detailed project plans and extensive documentation upfront, while agile thrives on flexibility, collaboration, incremental progress and embraces changes even late in the game. The clash is not just theoretical, but a real battleground where deadlines, budgets, and project success hang in the balance.
Fall outs can be seen in delayed projects, budget overruns and frustrated project teams. Balancing the structured discipline of the waterfall with the adaptive dynamism of Agile is a tightrope walk—one that demands thoughtful planning and phased transitions. The clash, though, isn´t insurmountable; it demands a strategic approach to integration.
Success leaves clues: Five Key Lessons Learnt that help building a resilient, scalable, and future-proof organization.
In the trenches of large agile projects, valuable lessons emerge. When using an agile approach, it should be introduced step by step: By first identifying project segments suitable for an agile incremental product development while the waterfall’s stability for defined critical milestones must be maintained.
Once this goal is set, the key lies in integrating the best of each method – leveraging the predictability of waterfall where needed and embracing agile responsiveness where change is the only certainty. To harness the strengths of both methodologies and enable a successful implementation, five principles should be followed:
1. Culture
Project teams require a cultural shift, in which the once deeply entrenched mindset of sequential planning is replaced by an iterative, collaborative mindset. This will take time and must be embraced by all team members. Beyond pure methodologies (e.g. how many meetings or project cycles are set up) the true transformation lies with the establishment of an agile culture. It is not just about implementing a set of practices but instilling a mindset that embraces change and continuous improvement.
2. Ownership
Each team member must take full ownership of the final product. Agile success stories often revolve around teams that evolve from mere executors of single tasks to proactive problem solvers. The need to embrace the flexibility and responsibility includes not only direct team members, but all stakeholders involved.
3. Communication
Effective management of large-scale projects hinges on constant and concise communication. Establishing clear channels, fostering cross-functional collaboration, and investing in training programs can bridge the gap between the two methodologies. Depending on the chosen agile method, the role of “go-betweens” become a cornerstone of communication. The Scrum method, for example, utilises a “Scrum Master” as a problem solver and communicator in and between different teams.
4. Technology
As the combination of both worlds is extraordinarily complex and includes different project plans and timetables, its technical foundation must be right. Project management tools which offer efficient progress tracking, streamlined processes and methods for well clustered collaboration are a must. Nevertheless, to avoid unnecessary friction with too many tools, keep their number at a minimum.
5. Adaptation
The whole team should be able to adapt to the unforeseen challenges inherent to agile projects. Nonetheless, the PMO should do their homework: Risks should be identified, assessed, and managed beforehand to keep the number of “unknown unknowns” at a minimum. The role of the agile PMO is different to the waterfall model, as communicating within the team (facilitating a smooth working environment) and with stakeholders becomes an essential part of the project.
Implementing Agile is not only about speed – it requires a nuanced strategic approach to ensure long-term impact and sustainable business growth.
In conclusion, the benefits offered through the implementation of agile project management in large scale projects are undeniable. Harmonious integration is not only achievable but leads to enhanced project outcomes and stakeholder satisfaction. This counts for the classical triad of constraint goals (budget, schedule, and scope/quality) as much as for goal-clarity, team experience and overall stakeholder engagement. One of the main drivers for effective teams lies in the interplay between stakeholder concern and responsiveness. If an agile project adapts quickly to external factors and includes them in their releases – triggered by new regulations or needs from stakeholders – the road is paved to success.
Avoiding clashes with the traditional waterfall model demands a nuanced and strategic approach. Successful integration is not about discarding one in favour of the other but finding a complementary balance that maximises the strengths of both.
