domingo, febrero 05, 2017

Agile, Fintech & Product Management in Regulated Spaces

Red Hamburg Skyline

Of all the twelve principles in the Agile Manifesto, number four is the one that draws my attention the most:

Business people and developers must work 
together daily throughout the project.

And it is particularly interesting because it seems to be a vivid reflection of the recognition that a good degree of cross-functionality is essential to  ensure that commercial requirements (typically the priority of "Business People") are adequately addressed in the final product.  By adhering to this principle an Agile enterprise avoids fostering the outdated and pernicious distinction between "the business side" and the "technical side" and instead emphasizes a cross-functional collaboration aimed at delivering tangible business value.

It is in that spirit of cross-functionality embraced by the Agile methodology that I propose to expand and build upon in this piece. In fact, one of the key things I have learned in my role as the Legal and Compliance guy  at Kreditech is how important it is for "Legal and Compliance People" to work very closely with  "Business People", “Product People” and Developers.

In the Kreditech Group we operate across several geographies and run an integrated financial services platform comprised by three different credit products.  These products are complex not just from a commercial perspective but also from a regulatory perspective. In fact, most countries have adopted legislation that determines the way in which credit products are to be structured, marketed and priced to the point that firms engaged in credit issuance face a level of regulatory-driven complexity that is not typical of other domains. This is particularly true for the Kreditech Group which develops software in order to deliver on its commitment to build the most convenient and user-friendly online borrowing experiences while remaining compliant with both applicable Law and regulation (including self-regulation).

It is in a space as regulated as credit where it becomes clearly apparent that CEOs and Strategists need to understand the many ways in which Law and Regulation constrain their formulation of corporate strategy, but also where principle four of the Agile Manifesto seems to gain another dimension: The creative impulse of product teams is also constrained by Law, so it is not just a symbiotic relationship between "Business People" and Developers that is required but also a symbiotic relationship that includes "Legal and Compliance People".

Perhaps what is necessary is also that "Legal and Compliance" people start seeing themselves as "Business People" in the sense that even when they assume the typical role of "Compliance officers" they operate under the premise that their main role is to assist the organization to remain compliant instead of simply controlling and monitoring. That is, however, a more complicated discussion, so at this point I would steer away from it in order to propose some non-exhaustive measures and attitudes to embrace in order to foster the kind of healthy collaboration that is required between "Product People" and "Legal & Compliance People" in heavily regulated spaces:

  1. Earlier is always better. In fact, no matter the flexibility and adaptability that is emphasized by Agile, it is very important to involve Legal & Compliance personnel very early on to ensure that at the very moment the product is conceived they are able to flag its inherent risks and legal nuances so that these are reflected in product requirements and specifications. This, in my experience, is very critical to avoid that Legal & Compliance personnel adopts a reactive stance towards the development process but instead acts as a partner of the Scrum Team since the very beginning.
  2. Interdisciplinary Professionals are key.  The in-house Legal team of a fin-tech company should strive to recruit individuals who are tech-savvy enough to be able to speak the language of developers in order to assist Product Owners in the process of translating legal provisions, regulatory guidelines and court decisions into product specifications.  While Prof. Lawrence Lessig has argued that Code is Law, in this context it would also be valid to argue that one of the roles of the In-house Legal team is to assist the process by which Law becomes Code. Conversely, product people who have experience in regulated spaces and/or a good nose for regulatory issues are always an asset.
  3. Precise documentation is of the essence. The legal questions posed by the product vision of a fintech product owner are typically not plain-vanilla. A question on a specific point of credit law, for example, could have a different answer depending on whether it is made in the context of revolving credit or installment loans or bullet-repayment loans.  Therefore, it is very important to be able to document the product vision very thoroughly and holistically in order to allow structured legal analyses.  Good product documentation becomes particularly critical when it becomes necessary to engage external expertise in order to find an appropriate answer to a complex question at hand.  In the absence of adequate documentation, an attempt to make an in-house legal assessment of the product vision (or out-source it)  becomes very expensive guess-work:  What does this or that product owner really have in mind?
  4. Make Legal & Compliance Personnel an integral part of Scrum: The ideal scenario here (if not making them part of the team) would be at least to have them present in the process of revising increments and planning next steps after every sprint.
  5. Is it possible to think of the Legal nuances of the product as Features? This is perhaps a bold suggestion and I am sure it will be anathema to some Product Managers, but in an ideal world legal/compliance requirements are seen as product features and there is a scrum feature team who is dedicated to deliver them.   Why not?

In my experience none of the attitudes and measures mentioned above are easy to embrace or implement. Having this constant interaction between Product Teams and Legal/Compliance teams is very frequently not a friction-less effort.  It takes a lot of patience and commitment from both sides.

However, I will venture a prediction: Some of the next great innovations in fin-tech will stem from this constant dialectic between interdisciplinary professionals: Between great product people and great legal & compliance people working together to build amazing customer experiences and deliver business value in a regulated world.

Disclaimer: The opinions expressed by the author in this article are strictly personal and do not reflect the official position of the Kreditech Group.

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