KB DIGITAL JOURNEYIntroduction KB Agile Transformation

N O V E M B E R 2 0 2 0

Antonín Prell – Manager Digital Technology Office

GARTNER │ NOVEMBER 2020 │ 2

AGILE TRANSFORMATION - IT IS A CRUCIAL DECISION

▪ The support and active involvement of the CEO and BoD is key

▪ During the transformation you will address key and risky decisions

in responsibility BoD

▪ The bank's operational model will change dramatically▪ mainly concerning middle management

▪ new organization will be created - more flat with a minimum of layers

between the BoD and squads

▪ External view is an advantage - a consultation from an entity which

has experience in how to design and solve certain situations

▪ some changes may seem risky and unnecessary - and here an external

perspective is very important to keep motivation for transformation

changes

KB as a large and profitable company with social responsibility in CZ

Transformation decisions must be thoughtful and responsible to clients, shareholders and employees

3

FINANCIAL SERVICES ARE CHARACTERIZED BY INCREASING COMPETITIVE PRESSURE AND CUSTOMER DEMANDSTRADITIONAL OPERATING MODELS ARE POORLY EQUIPPED TO RESPOND TO RAPID CHANGE

11/4/2020

Traditional managerial

hierarchies are failing to

meet today’s expectations

Rigid processes

▪ Waterfall & stage-gates

▪ Admin and reporting

▪ Manual work

Linear strategy

▪ Analysis paralysis

Inefficient structures

▪ Increasing complexity

▪ Silo focus

▪ Slow to change

Bureaucratic culture

▪ Blaming, protecting turf

▪ Reward compliance rather than

impact

Advanced

analytics

Digitalization of

banking processes

and activities

New business

models and attackers

Employees

seek meaning

also from work

Demanding,

informed

customers

Globalization

at scale

Software at the

center of products

and services

EXPECTATIONS &

PRESSURES ON KB

Regulatory

pressures and

compliance

obligations

GARTNER │ NOVEMBER 2020 │ 4

TO DEAL WITH PRESSURES, ESTABLISH ITSELF AS A MARKET LEADER, KB HAS EMBARKED ON A JOURNEY TO ADAPT THE AGILE@SCALE

Organization-wide

transformationAgile Experimentation Domain based model Agile at Scale

A natural progression of

“Agile at scale” when all

functions which may

benefit from Agile ways of

working1 start working in

Agile manner

Structured roll out of Agile

and BizDev (BizDevOps

where possible) with

creation of fully end to

end teams across all

major delivery areas

Cross functional teams

across business and IT

Change activities are

created in selected

business domains such as

channels and marketing

Pilots with Scrum and

Kanban in selected IT teams

IT Bus

ines

s

Oth

er

Change

Run

Scope: All business, IT and Other

functions implement full Agile or its

elements

Scope: Selected IT teams in

Agile

Scope: Only Change activities

in AgileScope: Both Run and Change

activities in Agile

IT Oth

er

Change

Run

IT Oth

er

Change

Run

IT Oth

er

Change

Run

KB journey

GARTNER │ NOVEMBER 2020 │ 5

AGILE@KB FOCUSES ON DELIVERY ORGANIZATIONINVOLVING ~40% OF HQ POPULATION

Sales

Business

Operations

Support functions (~2,100 FTES)

Delivery (~1,500 FTES)

Information Technology

Information Management

Marketing

Project office

IT Operations

IT Infrastructure

In scope of the transformation

Overall ~8,000 FTEs in KB

Support functions contribute to Agile delivery through flow-to-work mechanism

GARTNER │ NOVEMBER 2020 │ 6

WE HAVE COMPLETED FULL AGILE@SCALE TRANSFORMATION IN LESS THAN 9 MONTHS IN Q1 2019

Start of KB

Change

preparation

Sequencing of

tribes and

CoEs launch

prepared

1st full QBR

market

Launch of

final 2 tribes

Launch of

Agile CoE

Lighthouse tribe

launched

Start of

design of

lighthouse

tribes

January

2018

May

2018

July

2018

August

2018

September

2018

February

2019

November

2018

GARTNER │ NOVEMBER 2020 │ 7

ALL MEMBERS OF THE AGILE ORGANIZATION COME TOGETHER TO CREATE AND SUPPORT CROSS-FUNCTIONAL TEAMS WITH FULL END-TO-END OWNERSHIP OVER THEIR ASSIGNED MISSION

Tribe

Collection of squads organized around the same purpose, delivering on a certain

mission in an autonomous and self-steering way

Typically includes between 50 - 150 squad members

Tribes can be categorized into Customer journey, Channel or Enabling Tribes

Example: Business financing, Physical distribution channels, Platform services

Squad

An autonomous cross-functional team able to define work and make business

decisions and execute on its mission as a part of the Tribe, with end-to-end

responsibility

Can be organized as a feature or enabling squad, depending on the purpose

Typically includes 5 - 9 squad members

Has E2E-responsibility for a certain purpose

Example: Profi products, Trade finance

Chapter

▪ Group of functional specialists responsible for building expertise and maintaining

standardization

▪ Each tribe member is also assigned to a Chapter, delivering and fostering delivery,

personal and professional development

▪ Typically includes 5 - 10 people

▪ Example: Customer journey specialists, Development engineers

Centers of Expertise (CoEs)

▪ Concentrated teams supporting Agile organization with specific expertise that cannot be

efficiently distributed across the organization

▪ Experts are staffed to squads triggered by Tribe’s needs, through flow-to-work mechanism

▪ Example: Agile CoE, Architecture CoE

Key entities overview

Squad N

Tribe

Squad 1

Squad 2

…… …

Chapter 1

Chapter N …

…

Chapter 2 …

Tribe lead

Agile coach

IT area lead

CoE

B

C

A

D

A

B

C

D

Flow-to-work

8

EACH TYPE OF TRIBE IS DIRECTLY RESPONSIBLE FOR A PART OF CUSTOMER’S EXPERIENCE, WITH EXCEPT FOR ENABLING TRIBES WHICH SUPPORT OTHER TRIBES

Customer Service

Strategy & Design Tribes“Way to the shop”Maximize and sustain segment

profitability

Business Enabling Tribes“The shop”Best-in-class experience for KB clients and personnel

regardless of the channel

Customer Services Development Tribes“Inside the shop”Services create a differentiating experience for our

customers

Technology Enabling Tribes“The fundamentals”Maximize the efficiency and impact of the delivery

organization as a whole

GARTNER │ NOVEMBER 2020 │ 9

AGILE@KB TARGET OPERATING MODEL FOR 2020 Supporting CoETechnology Enabling Tribes

Customer

Services

Development

Tribe

Customer Service Strategy

& Design Tribes Business Enabling Tribe

Current non-agile

organizationDelivery organization CoEs

Customer

Securing Life

Projects

Business

Financing

Platform Services

Data Platform Services

Enterprise Services

Risk Services

Retail Segment

Corporate Segment

Technology

Enabling Tribes

Customer Services

Development Tribes

Business

Enabling Tribes

Customer Service

Strategy &

Design Tribes

Infrastructure Services

Current Channels

Housing

Omnichannel Sales

Sales Network

Operations

Support

Functions

(Compliance,

HR, etc.)

Architecture

Information

Systems Security

Agile

Simplification

Development

Finance

Operations

Testing

Consumer

FinancingPayment Methods

Data Science

Markets Technology

GARTNER │ NOVEMBER 2020 │ 10

Quarter (12 weeks)

Product synchronization (PO Sync) incl. Alliance sync

QBR PROCES

Squad-level ceremonies are

aimed at achieving alignment

among Squad members

Board and Tribe Leader-level

ceremonies are aimed at

vertical and horizontal

synchronization

WedTueThu Fri Mon Tue Wed Thu Fri Mon

Retrospective

Sprint (2 weeks – length adjusted by the squad as necessary)

Sprint 1

(2 weeks)

Sprint 2

(2 weeks)

Sprint 3

(2 weeks)

Sprint 4

(2 weeks)

Sprint 5

(2 weeks)

Sprint 6

(2 weeks)

Tribe-level ceremonies are

aimed at achieving alignment

among Squads within a Tribe

and also across Tribes for

cross-tribe dependencies

Supersprint planning

incl. Aliance

Daily stand-up

Preparation for next QBR period

Sprint reviewSprint planning

Squad backlog refinement

Quarterly Business Review cycle (QBR)

Pre-QBR QBR MarketQBR MarketConsultation

panels

Point at which ceremony occurs

QBR memo writing and review

GARTNER │ NOVEMBER 2020 │ 11

TECHNOLOGY CHANGE NEEDSSKILLSET AND CULTURE DEVOPS

DevOps advantages for high performing IT

Improved speed to market and productivity

More frequent releases & higher customer engagement

Faster recovery and higher quality and stability

More innovation and creativity

Increased employee engagement & job satisfaction

Breaking down silos and eliminating waste

More efficient use of resources

Cloud-native development practices

Make IT as top business priority

▪ Define priority - clear view of priorities for capturing value from digital

▪ Attract and support IT talent

▪ New sourcing arrangements to scale the workforce

▪ Agile development and rapid releases

▪ Rapid innovation architecture supported by stable services

▪ Scalable cloud-based infrastructure

▪ High-quality integrated data

GARTNER │ NOVEMBER 2020 │ 12

NEW DIGITAL BANKSTRATEGIC PART OF KB2025 TRANSFORMATION JOURNEY

New Digital Bank (NDB) is a key topic of KB Change 2025 initiative

focusing on business and technology reconstruction of KB

▪ new coreSystem▪ new cardSystem▪ payHUB

NEW DIGITAL BANKKB CHANGE 2025

▪ Mortgage Factory▪ Corporate Strategy▪ Risk Management 2.0▪ NextGen CSR▪ Digital Sales & Servicing▪ Data Driven Company▪ Agile 2.0 organization

▪ New Digital Channels▪ Product sales-servicing▪ Permission model▪ Customer mgmt▪ Branch redesign▪ BO optimization▪ Leads generation & mgmt.▪ CIB portal▪ and much more

Create

New Digital Bank

by 2025

where clients and

employees will

desire to live KB

world and services

“

GARTNER │ NOVEMBER 2020 │ 13

PRINCIPLES OF NEW DIGITAL BANK EXECUTION New Digital Bank

transformation is

aligned with

AGILE 2.0

which is extending

AGILE@SCALEWay of Working and

prepares

DEVOPSbased

New Digital Platform

SIMPLIFICATION

Product and process simplification as a prerequisite and natural part of the design process.

INCREMENTAL DELIVERY

Products, offerings will be delivered incrementally – in larger number of smaller steps.

Visibility of progress with business results.

BUSINESS DRIVEN CHANGE

Driven by business benefits, enabled by fit-for-purpose technology. Business naturally involved through KB’s Agile organization.

GRADUAL MIGRATION

Aligned with trajectory of functional richness. Business as well as technical migration of products, customers.

GOVERNANCE

Aligned with our Agile@Scaleorganization, inspired by agile methodologies for large programs.

GRANULAR ARCHITECTURE

Limiting role of core banking to account management features – using product catalogue, customer master ....

DECOMMISSIONING PATH

Simplification of the information system and decommissioning of features along the journey.

Antonín PRELL

Manager responsible for

Digital Technology Office

and

Architecture Center of Expertise

e-mail:

antonin_prell@kb.cz