In its efforts to transform the customer experience from a traditional banking transaction to one that is more like a a consumer's interaction with Amazon or Apple, Capital One is relying on agile technology development to change the way it deploys new applications and services.
However, when Capital One bought ING Direct back in 2012, the two financial organizations had almost completely opposite information technology strategies. Capital One, which at the time was primarily a card company with a small but growing banking operation, relied on an outsourcing strategy for most of its systems that were considered commodity systems or technology. ING Direct, however, had a technology strategy where most of its technology was run in house.
"At ING direct, we didn't really outsource," said Rudy Wolfs, Senior VP of Card IT at Capital One, during his presentation at the InformationWeek Conference. Wolfs was one of the founding executives at ING Direct. "When ING Direct joined Capital One, we did things differently. There are things that are truly commodities, but there are also things that need to be in house for competitive advantage," Wolfs told the audience.
Although finding a balance between in-house development and commodity technology was challenging, the bigger change for the newly combined IT team was to adopt an agile development methodology for all technology projects, Wolfs reports. When Capital One started to roll out agile development in 2011, Wolfs said it amounted to just one percent of software that was delivered. Today, 85 percent of software is delivered by the agile method. With agile, Capital One now also releases approximately 400 product releases a month, has cut delivery times to three to six months while "cutting costs significantly" and has 95 percent of products meet expectations on the first release, according to Wolfs.
One of the most important aspects of the agile method deployment is to make sure that the business partners are intimately involved with the developers throughout the project. "Our business engagement is very high and that is very important," Wolfs related, noting that one of the metrics that Capital One tracks is now much time business leaders spend working with the developers. Currently Capital One has more than 3,000 developers and business users trained on the agile methodology.
Having business users interact with developers throughout the project is completely different than a traditional software development methodology, where IT receives specifications from the business side and reports back six months or a year later with a finale product — often missing the mark when it comes to the user's expectations. By having the business involved often, "they really feel like IT is like part of the team, not just a group that operates by itself," Wolfs said. "By having business involved with the development team along the way, it changes the entire dynamic with the business. They get a better product when they [busines and IT] are together." Capital One tracks nine metrics when it comes to agile, including agile team size, commitment level, quality of product, delivery time, cost and meeting expectations on the first deployment, among others.
However, Wolfs warned that measuring an agile program too soon can actually harm the project. "It's good to measure, but not measure too soon," he said, noting that rolling out strict metrics at the very beginning of migrating the development process to agile can lead to bad habits. "If you start to focus on guidelines right up front, those goals make for bad behavior." For instance, people will manage to the metrics rather than just working within agile to deliver better software.
While agile development has helped Capital One deliver better products to its users, Wolfs says that Capital One needs to also stay on top of the latest technologies. Capital One has set up three innovation labs for its developers so they can test new ideas without worrying about hurting other ongoing projects. "We need to give associates a space to innovate," he said. "We have three labs where the associates can test and learn, and to explore things that maybe people aren't thinking about. We need to do things like this because we believe we need to behave like a technology company."
In order to encourage innovation through the company, Capital One rotates developers through the innovation labs, rather than just leaving team of developers in the labs full time, although Wolfs notes that there are a few associates who are permanently assigned to the labs. "My goal is make sure the labs are not the only place where innovation is done. Innovation should be encourages on all of the teams," Wolf added.
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio