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CHALLENGES AND RISKS OF IMPLEMENTING INNOVATIVE PROJECT
MANAGEMENT APPROACHES IN UZBEKISTAN’S BANKING SECTOR
Mansurova Sevara Mansurovna,
Independent Researcher at Tashkent State University of Economics
Abstract.
The banking sector is increasingly adopting innovative project management
methodologies such as Agile, Scrum, and Lean to support digital transformation and improve
agility. Yet, banks in emerging markets face specific challenges. This study analyzes managerial
risks of adopting modern project management in Uzbekistan’s banking sector amid ongoing
reforms and digitalization. Using literature review and qualitative surveys, the research identifies
key barriers: cultural resistance, regulatory constraints, lack of skills and resources, and rigid
legacy systems. Findings show that while Agile and Lean can enhance efficiency and customer
focus, their implementation is limited by hierarchical culture, low awareness of frameworks,
strict compliance demands, and outdated infrastructure. The discussion links these issues to
global experience and proposes recommendations for managers and policymakers to enable agile
transformation in a regulated transition economy. Overcoming these challenges is vital for
Uzbekistan’s banks to unlock digital potential and remain competitive in a rapidly changing
financial sector.
Keywords:
Project Management; Agile; Scrum; Lean; Banking Sector; Digital
Transformation; Uzbekistan; Organizational Change; Regulatory Compliance
Introduction.
The global banking industry is undergoing rapid transformation driven by
digital innovation and evolving customer expectations. To keep pace, banks increasingly adopt
modern project management approaches such as Agile, Scrum, Kanban, and Lean. These
methodologies, originally popular in software development, are now gaining traction in financial
services as tools for enhancing flexibility, efficiency, and customer orientation. Agile emphasizes
iterative development, cross-functional collaboration, and adaptability, while Lean focuses on
eliminating waste and improving processes. Together, they promise faster delivery of digital
products, operational improvements, and the fostering of innovation cultures.
Despite these advantages, banks have been slower than other industries in adopting such
methods due to their size, complexity, hierarchical structures, strict regulatory frameworks, and
risk-averse cultures. Implementing Agile and Lean is not merely a process change but a cultural
and managerial transformation, requiring leadership support, organizational restructuring, and
mindset shifts.
In Uzbekistan, these challenges are particularly relevant. As a transition economy, the
country has undertaken broad reforms in its banking sector since 2020, including privatization of
state-owned banks, modernization initiatives, and alignment with international regulatory
practices. The national “Digital Uzbekistan” agenda has further accelerated the push toward
digital transformation, prompting banks to invest in new technologies, financial products, and
partnerships.
Some banks in Uzbekistan have begun experimenting with Agile and Lean in digital
transformation programs, establishing project management offices and introducing iterative
methods. Early experiences suggest gains in transparency and reduced time-to-market. However,
significant obstacles remain: entrenched hierarchical cultures, limited familiarity with Agile
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principles, resistance within compliance functions, and outdated legacy systems.
This context highlights a clear research gap. While extensive studies exist on Agile
adoption in software firms and Western banks, there is little research on its application in post-
Soviet or emerging market banking systems. The unique combination of reform, regulatory
transition, and traditional organizational culture in Uzbekistan creates a distinctive environment
for exploring the risks and challenges of introducing modern project management.
This study addresses these issues by examining the managerial challenges and risks
associated with implementing Agile, Scrum, and Lean approaches in Uzbekistan’s banking
sector. Drawing on a literature review and qualitative data from industry practitioners, it
identifies the primary barriers to adoption and assesses their implications. The contribution lies
in offering insights for bank executives and policymakers on how to align modern project
management practices with regulatory requirements, overcome cultural resistance, and foster
organizational conditions for successful transformation.
Methods.
In preparing the article, such research methods as the method of horizontal
and vertical analysis, the formal-logical method, the method of scientific abstraction, and
econometric analysis were used.
Results.
The study reveals that organizational, cultural, and regulatory factors
significantly hinder the adoption of Agile, Scrum, Lean, and similar project management
methods in Uzbekistan’s banking sector. Despite strong interest in modernization, several
persistent challenges remain.
1. Cultural and Organizational Resistance
Uzbek banks operate with hierarchical, bureaucratic, and siloed structures that conflict
with Agile’s collaborative and flexible nature. Employees are used to rigid processes and
detailed up-front planning, creating skepticism toward iterative methods. Leadership buy-in is
often superficial, with executives approving Agile in theory but continuing to demand traditional
documentation and control. Resistance to change is reinforced by the banking sector’s strong
risk-averse culture, where mistakes are penalized and experimentation discouraged.
2. Regulatory and Compliance Constraints
Banks must comply with strict regulations that emphasize documentation and formal
processes. This conflicts with Agile’s preference for lean documentation and adaptability.
Compliance teams often require full paper trails, slowing projects and forcing hybrid models that
dilute agility. Frequent regulatory changes also disrupt project cycles, while fear of non-
compliance leads management to limit or tightly control Agile initiatives.
3. Knowledge and Skill Gaps
Most banking personnel have little formal training in Agile or Lean, leading to
misunderstandings and inconsistent application of methods. Concepts such as sprints or stand-
ups are often misinterpreted, resulting in flawed implementations that resemble traditional
approaches under a new name. The shortage of qualified coaches and certified specialists further
limits progress, and attempts to introduce Agile risk becoming superficial exercises without
proper understanding.
Banks in Uzbekistan lack internal champions and external coaches to guide Agile
adoption. Most employees rely on trial-and-error or self-study. Without consistent mentoring,
teams tend to revert to old management habits. Attempts to use tools like Kanban often failed
because no one reinforced the new routines. Successful transformation requires continuous
coaching and reinforcement.
Learning Curve and Productivity Dip
Introducing Agile initially caused productivity declines and confusion about roles. In the
high-stakes banking sector, this was sometimes perceived as failure. Proper expectation
management is essential: leadership must understand that efficiency often drops before
improving. Training, patience, and realistic timelines are critical for success.
Legacy Processes and Technological Constraints
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Many banks still operate on outdated IT systems, making rapid updates and integrations
difficult. Standardized processes for procurement, risk management, and approvals were
designed for traditional models and conflict with iterative methods. Efforts to streamline
operations often meet resistance, but Lean initiatives such as digitization and reducing approval
layers have already shown efficiency gains.
Project and Operational Risks
Transitioning to Agile carries risks of project delays, cost overruns, and operational
instability. Concerns remain about deploying changes too quickly in mission-critical systems.
Reputational risks and employee change fatigue are also significant. To manage these, banks use
parallel processes, gradual scaling of Agile, and strict quality control measures.
Analyses
.
Balance Sheet Dynamics
.
The National Bank of Uzbekistan (NBU)
experienced strong growth between 2020 and 2021. Total assets rose from
78.0 trillion UZS in
2020
to
99.0 trillion UZS in 2021
, a growth of
27%
. Liabilities also increased by the same
proportion (from
64.8 trillion UZS
to
82.3 trillion UZS
), while equity expanded from
13.2
trillion UZS
to
16.6 trillion UZS
(+26%).
This demonstrates that the expansion of the bank’s asset base was funded both through
external liabilities and internal capital growth, preserving balance sheet stability.
Figure 1. Growth of Assets, Liabilities, and Equity (2020–2021)
Interpretation:
The figure shows a consistent upward trend across all three components
of the balance sheet, highlighting proportional growth. This indicates effective financial scaling
without overreliance on leverage.
2. Capital Structure
The composition of funding remained stable. In 2021, liabilities accounted for
83%
of
total financing, while equity represented
17%
.
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Figure 2. Capital Structure of NBU (2021)
Interpretation:
The figure illustrates the bank’s heavy reliance on liabilities, which is
common for financial institutions but requires robust risk management. Maintaining adequate
capital adequacy will be critical in ensuring resilience under future regulatory tightening and
market fluctuations.
3. Asset Composition and Lending Activity
Loans and advances remain the dominant component of the asset portfolio, representing
more than half of total assets. In 2021, they increased by
26%
, reinforcing the bank’s role as a
major credit provider. Investment securities and interbank placements also expanded, though
their relative share is still smaller compared to loan operations.
Interpretation:
This signals a clear lending-driven growth strategy, consistent with the
state-led development role of the NBU. However, such concentration poses credit risk,
particularly in a transitioning economy like Uzbekistan.
4. Liabilities and Funding Sources
On the liability side, customer deposits expanded by nearly
30%
, strengthening the
bank’s resource base. Foreign borrowings also grew, showing deepening cooperation with
international partners and financial institutions.
Figure 3. Financial Growth Trends of NBU (2020–2021)
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Interpretation:
The trend lines highlight steady growth in assets, liabilities, and equity,
which move in parallel. While this indicates stability, it also suggests limited structural
diversification, as reliance on traditional banking income streams remains high.
5. Profitability and Operational Efficiency
Net profit grew by
18%
in 2021, supported by rising interest income. However, operating
costs grew almost proportionally, keeping the cost-to-income ratio high by international
standards.
Interpretation:
Despite profit growth, efficiency remains constrained by legacy processes
and limited digitalization. From a
project management perspective
, this underscores the
urgency of adopting
Agile and Lean methods
to optimize processes, reduce bureaucracy, and
increase customer-centricity.
Discussion
Implementing Agile, Scrum, Lean, and similar project management approaches in
Uzbekistan’s banking sector is a complex but transformative process. The findings highlight
cultural, regulatory, skill-related, and technical challenges that make the transition difficult.
Interpretation of Findings
Many of the obstacles identified in Uzbek banks resemble
those faced globally, though shaped by local conditions. Cultural resistance to cross-functional
teamwork and Agile values is widespread, but in Uzbekistan it is intensified by historically weak
management practices and limited exposure to modern approaches. Moving toward empowered
teams, servant leadership, and continuous improvement represents a dramatic shift from past
traditions, and early implementation attempts often meet skepticism.
Regulatory requirements present another major barrier. Heavily regulated industries tend
to adopt Agile more slowly due to the need for strict compliance. In Uzbekistan, regulatory
reforms, including the introduction of risk-based supervision, indicate a shift toward outcome-
oriented oversight. This opens opportunities for banks to combine Agile practices with strong
governance and compliance systems. Our results suggest that cautious experimentation—such as
embedding compliance officers within Agile teams—can help bridge agility and regulatory
oversight.
Managerial Implications
Uzbek banks should consider strategies such as:
Embedding compliance and risk functions into Agile teams.
Ensuring transparency and documentation through Agile tools.
Building management and staff competencies in Agile methods.
Engaging in dialogue with regulators to shape practices that balance innovation and
stability.
Overall, the transition to Agile is both necessary and challenging. Overcoming cultural
inertia, aligning with regulatory reforms, and developing managerial capacity will be essential
for banks in Uzbekistan to capture the benefits of modern project management without
undermining stability or compliance.
A critical finding is the
knowledge and skills gap
, which has direct implications for
successful Agile adoption. Organizational change cannot rely only on technology or processes; it
must be paired with
human capital development
. In other countries, banks that achieved
successful Agile transformation invested heavily in training programs and external coaching.
One well-known case is ING in the Netherlands, where the bank reorganized into small
empowered teams supported by structured education and leadership commitment. Uzbek bankers
are aware of such examples, but local institutions currently lack the internal expertise to replicate
them. This highlights the need for a
phased approach
: starting with pilot projects, training a
cadre of “Agile champions,” and gradually building in-house expertise. Our survey results
confirm this, showing that most employees have not received formal Agile training – an urgent
gap to be addressed through workshops, exchange programs, and expert-led mentoring.
Legacy systems and process rigidity
represent another barrier. While many Uzbek
banks are investing in digital transformation – including IT modernization and automation –
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outdated infrastructure still limits the feasibility of Agile practices such as continuous delivery.
However, the same wave of digitalization that pressures banks to become more Agile also
introduces new technologies (e.g., modular platforms, APIs, and cloud computing) that make
Agile easier to implement. To maximize impact,
technical modernization and process reforms
must evolve in parallel with management methodologies
. Establishing a modern project
management office (PMO) that integrates Agile governance principles could ensure
synchronization between technology upgrades and organizational change.
Finally, the
risks of transition
cannot be overlooked. Agile is not a universal solution,
and adopting it in a highly regulated environment requires careful risk management. A practical
way forward is to start with
controlled pilot projects
in non-critical areas, allowing teams to
experiment and demonstrate quick wins. This mitigates operational risk while building
confidence. Some banks may initially adopt a
hybrid or bimodal model
– applying Agile in
innovation projects while maintaining traditional management for core systems – but the long-
term objective should be to expand agility across the organization. Continuous improvement and
structured retrospectives, key Agile principles, can help banks adapt the methodology to their
unique risk profile while gradually overcoming cultural resistance.
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