The top financial services firms aren’t just weathering the storm. They are turning the experience to their advantage and building the capabilities they require to thrive in the new reality.
Rightfully so, the first reaction to COVID-19 was to protect employees and customers. And going forward, this must remain a central tenet of the business strategy – not only for business continuity purposes, but also as a way to shape and enhance organizational culture.
While employee well-being must remain central to any organizations strategy, my conversations with financial services executives and industry analysts around the world suggests the leading firms are also now focusing on five key priorities as they plan their path to recovery.
1. Productivity improvement and technology enablement. Financial services firms are looking for ways to rapidly accelerate their digital transformation and cloud enablement roadmaps.
2. Reconnecting with customers. Recognizing that customer expectations and needs have rapidly changed, firms are now implementing programs aimed at improving customer engagement.
3. Creating vibrant ecosystems and partnerships. With business models and market dynamics continuing to evolve, financial services firms are engaging with non-traditional partners to create new value propositions for customers.
4. Embedding social responsibility and purpose. As markets and economies look towards recovery, there are growing calls for increased focus on environmental, social and governance considerations.
5. Improving risk management and agility. The leading financial services firms are taking steps today to improve their ability to deal with sudden shocks and unexpected risks in the future.
While the immediate priorities seem clear, the path towards achieving them is somewhat less so. Indeed, my conversations with financial services execs suggest most are struggling to make significant change – let alone keep up with the pace now required.
The problem isn’t motivation: many financial services firms had already been working on these priorities long before COVID-19. The real problem is capacity and capability.
Ongoing lockdowns (and the threat of future lockdowns) have disrupted normal workflows and project lifecycles. Virtual working models (while keeping the lights on) have dampened internal innovation and collaboration. Recent efforts to ‘reshape’ operations in the immediate aftermath of COVID-19 has left many financial services strapped for resources.
At the same time, many financial services firms are struggling with the same talent shortages and capability gaps they were experiencing before COVID-19 struck. But now, the war for that talent has become even more ferocious. New work models and the growth of the ‘gig economy’ is helping bridge the gap somewhat. But financial services firms still lack many of the key capabilities and skills required to thrive in the new world order.
What I’m hearing from executives is that they want to learn from the experiences of the past few months. They see COVID-19 as an opportunity to radically rethink their business and operating models. And they are looking for new ideas, technologies and capabilities to help drive them along the path to recovery.
Over the past few months, our network of financial services professionals have been working closely with their clients and market participants to alleviate their short-term capacity constraints and bridge their longer-term capability gaps. More importantly, perhaps, our network has been helping the leading firms to discover radical ideas, achieve genuine innovation, deliver demonstratable results and create deep collaboration in order to accelerate and enhance their long-term strategy.
In short, they are helping financial services firms anticipate tomorrow while delivering today.
To be sure, COVID-19 has brought terrible suffering and hardship to large parts of the world. And it has also forced businesses of all types to fundamentally rethink their traditional operating models, business models and customer value propositions. For the financial services industry, the transformation will be challenging; but it will also be necessary.
I believe the financial services markets of the future will largely be shaped by those firms that are able to anticipate tomorrow while delivering on the priorities of today. They are the ones that are turning the COVID-19 experience to their advantage and building the capabilities they require to thrive in the new reality.