Barclays’ Aim: Agility
Agile is not a word that is usually associated with a bank that is more than 325 years old and has approximately 135,000 employees. However, at the start of 2015 Barclays Group embarked on adopting Agile principles, originally a methodology for developing software more quickly to meet changing customer requirements. In equities this has meant setting up cross-functional teams on the trading floor so they operate more like a fintech company as the business faces a barrage of change from new regulations and competitors.
Nej D’jelal, managing director, head of electronic equities product, Europe, Middle East and Africa at Barclays, told Markets Media: “Barclays has recognised the role played by technology in markets execution and accordingly the need to develop an ecosystem that enables a balance between the rapid delivery of new products that satisfy clients and robust controls to support orderly markets.”
Software had traditionally been developed using a ‘waterfall’ model following a number of predefined steps with progress flowing down these phases, like a waterfall. However, once a phase was complete it was very expensive to go back and make amendments, similar to trying to change the foundations after a house has been built, even if the business has completely different requirements.
In 2001 a group of developers published the Agile Manifesto and said their highest priority was to satisfy customers through early and continuous delivery of valuable software. An Agile process allows changes to be accommodated through using self-organising teams which involve personnel from both IT and the business. The team work for a specified period of time to produce a working product which can be demonstrated to customers so feedback can be included in the next iteration.
D’jelal said: “We stand out in equities for co-locating quants, product specialists and technologists together on the trading floor. This is a major deal as it crosses business and technology silos to form one team.”
Jonathan Smart, head of development services, Group CTO at Barclays, told Markets Media that before 2015 there were “islands of Agile” across the firm and an Agile Community of Practice (CoP) with approximately 2,000 voluntary members. Around this time the firm’s strategy shifted to adopt Agile and Lean principles at scale.
“The grassroots members of CoP put a transformation proposal to the head of operations and technology, which was accepted,” added Smart. “The whole enterprise embarked on adopting Agile and Lean principles from January 2015, specifically not just in IT, also areas such as audit, compliance and CRES, commercial real estate solutions, with a goal of end-to-end business agility.”
Paolo Aloe, managing director, head of markets execution technology and specialized infrastructure, told Markets Media that from an IT standpoint, Agile methodologies are not new but banks have been slow adopters as they have to err on the side of caution in deploying changes due to regulatory constraints.
“As the most regulated industry, processing significant volumes and needing to maintain customer trust, we have to have speed and control. Agile not fragile,” said Smart. “We’ve done a lot of work in this space, improving and Lean-ing the control framework from the previous ‘waterfall’ variant, so that it’s a risk sensitive approach with early and often conversation and automated tooling to ensure that necessary controls are implemented, whilst catering to an incremental and iterative delivery.”
Aloe said: “We radically changed how development teams operate to form multidisciplinary feature teams who sit around the same table on a trading floor. They have full ownership of the product life cycle as in a fintech firm.”
An Agile team will include legal and compliance, who join the testing process, to ensure that regulatory requirements are met. The teams measure success by time to market between an idea to delivering a product to a client which is measured in units of two-week sprints. To increase productivity the bank has invested in tools to automate as much as possible after coding such as tracking progress, reviewing the quality of source code and testing.
Increased flexibility and speed are important as electronic trading spreads from equities to other asset classes, and banks look to cut costs while meeting new regulations such as MiFID II, which will come into force for European financial markets next year.
Aloe added: “Equities has been the biggest asset class which had depended on technology but foreign exchange and rates are moving in the same direction and that will be accelerated by MiFID II.”
D’jelal said: “MiFID II will lead to more algo customisation, focus on best execution, unbundling and richer data so we are geared up to best in class to compete. We have built an ecosystem which is similar to how a fintech company would work which is a unique selling point.”
Under MiFID II investment firms will have to demonstrate objective selection of brokers, algos and routing which will likely result in more standardization. “Hence, there is significant value in investing in best in class execution products and services, which is precisely what we are doing,” D’jelal added.
Smart gave some examples of the benefits for teams who have increased their agility such as average incidents per app per month dropping by 70% over the past year, which shows an increase in quality. Time to market for new features has dropped by over 40% on average, comparing Agile to Agile. “Comparing traditional to Agile and the time to market is orders of magnitude faster, which enables fast feedback and fast learning,” he said.
Smart added that as far as Barclays knows, this is the world’s largest and fastest Agile adoption at this time. “In two years there are approximately 15,000 colleagues working in an Agile manner who weren’t previously and the percentage of change implemented in an Agile manner has gone from 4% at the beginning of 2015 to 60% at the end of 2016,” he said.
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