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Transforming with confidence

Transforming with confidence

Financial services CEOs say they are confident about their transformation strategies. But underneath the bullish demeanor boils a level of uncertainty.

Ask any financial services CEO how their transformation program is going, and you are sure to get a positive response. Indeed, according to a recent global survey of financial services CEOs conducted by KPMG International, they are practically glowing about their progress to date.

Almost all CEOs - 91 percent - think their transformation program will be done in the next three years. And around half believe their organization is already actively disrupting the markets in which they operate. In fact, 71 percent say they are personally prepared to lead their organization through this period of radical transformation.

Dig a little deeper, however, and it starts to look like - maybe - some financial services CEOs may have growing concerns about whether their transformation strategy will deliver the results they are expecting.

Consider this: most financial services CEOs are confident they can grow their organization over the next 3 years. But the majority don't expect topline growth of more than 2 percent. Just 5 percent say they have already achieved significant ROI on their overall digital transformation program. Forty-two percent admit their technology investments are still largely tactical rather than strategic in nature.

Yes, financial services CEOs are confident they are out-transforming their competitors. But they seem increasingly worried they may not be moving fast enough or strategically enough to deliver what customers expect from a 21st Century Enterprise.

At the risk of being overly-simplistic, I'd argue that much of the problem comes down to challenges achieving the agility and flexibility that is required at all levels of the organization. The reality is that financial services CEOs recognize the need for greater agility - 61 percent of the respondents to our survey agree that agility is the new currency of business - but they struggle to achieve it.

What are leading financial services organizations doing to improve their organizational agility and flexibility? My work with them suggests they are focusing on three main strategies:

  • Creating a more agile workforce: As our recent edition of Frontiers in Finance clearly demonstrates, an agile and flexible workforce will be key to transformation success. And financial services CEOs seem to recognize this fact - most agree they will need a vast array of new capabilities (such as data scientists, cyber security specialists and so on) to deliver on their growth plans. Yet, interestingly, the majority also say they will wait until they achieve certain growth targets before hiring these new skills (which, in my opinion, seems like a sure-fire way to reduce organizational flexibility and agility).

  • Rethinking their foundations: In my conversations with financial services CEOs, I frequently find that their own organizational structure and supporting infrastructure is creating the greatest impediment to delivering on their transformation agenda. Most recognize they have been underinvesting into operations and technology for decades. The leaders are now moving quickly to try to reduce their reliance on old technologies and break the status quo of their organizational structures to drive greater agility and flexibility.

  • Leveraging partnerships and joint ventures: Our survey clearly shows that financial services CEOs recognize the importance of partnerships. In fact, most (54 percent) go so far as to say they see third-party partnerships as the `only way for our organization to achieve the agility it needs' to survive in the new environment. The leaders are being realistic about their core competencies as an organization and seeking out partnerships and alliances that can deliver the specialized skills and capabilities they require through the transformation journey and beyond.

To be clear, financial services CEOs have every reason to be bullish about their progress on their transformation agenda. Compared to previous efforts to `transform' in the sector, most organizations seem to be achieving real and lasting change. But if financial services CEOs want their transformation journeys to end at the right destination and at the right time, they will need to improve the agility and flexibility of their organization, their capabilities and their strategies.

The confidence is warranted. The uncertainty is, perhaps, prudent.

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