The term ‘paradigm shift’ is often overused in business speak for minor and frankly insignificant developments. However, in its correct sense, it refers to a wholesale change in how a society views science, religion, industry or any other major entity. While the phrase has become one of the main culprits for business jargon – given the huge pace of change in banking and finance in recent years, it’s not an over-exaggeration to refer to a paradigm shift in the sector. Modern banking – and the way society at large views the financial industry – has changed so much in the past decade, that it is now almost unrecognisable.
This rapid and radical change promises exciting opportunities for financial services organisations to reimagine themselves, realign their relationship with customers and reassert their position in the wider market. For your organisation to capitalise on this change, and to avoid being left behind, you will need to develop a strategy to transform the way you provide services to this new scenario. And to the victor, go the spoils.
Perspectives on the future of banking
With change so fast and unpredictable in the financial industry, it would be unwise to prophesise about the future. Nonetheless, to decide effectively on your strategy going forward, it will be essential to get a wider idea of what is changing and understand the forces at play. Let’s turn to PwC whose The Future Shape of Banking report nicely sums up some of these major trends:
- Demographic and social change
- Shifts in global economic power
- Rapid urbanisation
- Climate change and resource scarcity
- Technological breakthroughs
- Regulation, especially in Europe, China and North America
On a very high level, these global developments are bringing about major clashes and struggles which are all impacting on how banks and financial service providers go about their business. Take technology – the ever wider availability of the internet, mobile and ground-breaking software are pushing banks to innovate at a high rate and change how they deliver services to customers. The Guardian even wonders if new technologies will force banks to have their own ‘Uber moment’. Just a few years ago, the vast majority of customer transactions were carried out in-branch. Now, everything from checking funds to applying for a mortgage can be done online.
These kinds of changes will continue to force banks to adapt and reposition themselves, and if they don’t adapt, they can expect to rapidly become irrelevant.
So, how can financial institutions begin to transform?
If many aspects of the financial industry are undergoing change, one area that has stayed the same is the fact that success depends on being customer focused. You need to understand what your customers expect of your service in today’s digital context and begin to change your organisation in a way that will align with their needs. So, how can you transform your business to begin really taking advantage of the possibilities of this new era?
- Understand what your customers need
Any company can begin implementing change policies, yet if these are not aligned with the needs of customers, the change will largely be irrelevant. It is, therefore, essential that the changes you make fit around how customers expect to interact with you – everything from how they get in contact with you to the way you provide services.
- Develop an end goal for change
While it may evolve over time, you need to begin business transformation with a clear end goal. So, decide what you want your services to look like in future. Perhaps you want to provide a better mobile experience to customers. Maybe you plan to change your approach to demographic trends by providing different kinds of services to an ageing population. Perhaps you plan to become leaner and make it easier to scale up or scale down. Whatever your end goal, it is essential to have a target to guide your action going forward.
- Design a strategy for creating change in your business
Because every business is different, you need to design a strategy that will lead to the kinds of changes you are seeking to create. This will involve identifying the departments that might need restructuring, defining which skills you will need, deciding who needs retraining and whether you need to hire new resources. This is a great opportunity to ask big questions. If you’re a retail bank, for instance, is now the time to close down your cash desks? Business transformation is about making bold moves to help you be better prepared for the future.
- Prepare for resistance
Change is often met with resistance, and so transforming a well-established business model can be especially hard. Nonetheless, as the chairman of Lloyds Banking Group stated a couple of years ago: “the industry faces more change in the next 10 years than there has been in the past 200”. Your people need to adjust to change, and so managing that change in a way they understand and adopt is, therefore, crucial.
The business transformation consultants
The financial services industry is, in many ways, entering a new era. Its services and goals remain just as valuable as ever, yet established firms must adapt how these services are delivered and come up with new and innovative ways to transform if they hope to remain relevant.
Program Framework are leaders in the field of business transformation consultancy. With offices in the City of London, we are well placed to help leading financial businesses capitalise on the opportunities of this new era. Contact us today to learn more about our business transformation expertise.