Innovation and the financial services industry
CEO concerns related to transformation are certainly present in the financial services industry. Financial institutions are under pressure from fintechs — innovative companies able to leverage technology to deliver more effective and efficient services to customers.
Yet, financial institutions have strengths that shouldn't be discounted: a large customer base, stakeholder trust and deep personal relationships. These strengths will likely make it difficult for the industry to be completely disintermediated in the near-term. Over the coming decades, however — as millennials take over from the baby boomers and Gen X — the speed of disintermediation could grow. In the meantime, traditional organizations have an unparalleled opportunity to link their strengths with innovation to become more competitive.
But how can business leaders merge the old and the new effectively? They can start by focusing on three critical activities:
Create a future-focused strategy
Traditional financial institutions today are faced with the need to evolve into organizations able to respond to future needs, even while managing their traditional customers and day-to-day challenges. These challenges are echoed among CEOs globally, with 38 percent saying they need to reposition their brand to meet the needs of millennials and only a quarter saying they are currently exceeding their customers' expectations for a personalized experience.
Developing a future-focused strategy that identifies what they want their organization to be can help leaders proactively guide the transformation. By creating a future-focused strategy, leaders can ensure that responses to shorter-term challenges can be used as building blocks toward the desired future state - a state that will, in and of itself, keep evolving.
Shift to a more agile culture
Globally, almost 60 percent of CEOs believe agility is the new currency of business. Many companies believe that to be able to compete for talent and customers, they need to change their culture to one that is more agile and responsive rather than bound by risk aversion and tradition.
To shift the culture of a more traditional institution, business leaders need to champion change from the top. On the positive side, CEOs recognize their critical role in the success of transformation efforts. Seventy-one percent of participants in our CEO Outlook say they are personally ready to lead a radical organization transformation.
Getting it right will take effort. Business leaders need to understand the dynamics of the innovation culture they want to build and then actively communicate why the change is important to both the organization and individual employees.
Find the talent balance
Globally, 37 percent of CEOs are planning to increase their headcount by more than 6 percent over the next three years. That's not to say companies will be going to the same well for talent. In fact, many organizations recognize that the skills needed in the future will be different than they are today. Already, some financial institutions have focused their recruitment on in-demand specialized skills - such as data scientists, engineers and technical experts.
At the same time, financial institutions shouldn't forget what makes them unique: their existing workforce of people who understand the business and industry. As they continue to identify ways to compete in the tech talent war with companies like Google and Amazon, they should also look at ways to leverage their existing people.