Just one in ten financial services leaders believe they can rapidly take advantage of new opportunities ahead or adapt to unexpected changes in the future. This is in contrast to the average of two in ten European business leaders from all industries.
Alongside the need to juggle conflicting demands from consumers, regulators and shareholders, it is the speed at which they adapt to technology-led change and re-engineer critical processes that is heightening the burden.
The insights are revealed in a new study called ‘The Challenge of Speed’, conducted by the Economist Intelligence Unit, and sponsored by Ricoh Europe. Financial services respondents were from retail, corporate and investment banking as well as insurance.
There is clear confidence around developing new products and services quickly. Financial services leaders ranked it joint eighth out of ten from the areas most in need of rapid change.
However, the most crucial areas where financial services leaders stated they do need to rapidly change, over the next three years, are those that have already caused the industry some of its biggest headaches: adopting new technologies (first), attracting and retaining customers (second), and improving core business processes (third). And while over half (54%) said they have lots of ideas to tackle the future change, they admit that they lack the ability to execute their ideas well. This is higher than any other industry, where the average is 43%.
The significant gap between generating ideas to change and executing them may be linked to the financial services leaders caution over managing multiple stakeholders and regulations. They cited the biggest disadvantages of changing processes too quickly as 1) a loss of customers (38%), 2) increased expense (36%t), and 3) the company being exposed to new unmitigated risks (35%).
Carsten Bruhn, executive vice president, Ricoh Europe says: “2014, 2015 and 2016 still appear to present a myriad of conflicting challenges for financial services in its race to change. But by tackling the crucial areas highlighted, they can quickly turn the disadvantages to benefits. They can improve their responsiveness to client needs, be more effective and decrease exposure to risk.
“Financial services is the industry closest to digital transformation and this latest study shows that it is using technology extensively to operate faster – more than in any other industry. However, unconnected legacy systems continue to slow them down. There is an urgent need to further review technology assets and simplify core information and document processes.”
Financial services executives agree. The biggest barriers to executing ideas to increase the speed at which they are changing and achieve greater business agility are process related. The first obstacle is their bureaucratic decision making processes, followed by the need to effectively link technology platforms (second), and insufficient access to information (third). Then there are additional barriers to optimising core business processes. Poor governance of change management is ranked as the most obtrusive, followed by time constraints on executives and legacy technology platforms.
Bruhn says: “Juggling so many obstacles, while at the same time trying to focus on client services, transform internal processes and ensure regulatory compliance is a monumental task. It’s no wonder that financial services leaders are feeling under pressure. They can relieve some of the stress by drawing on more expertise and drive internal change programmes to successfully realise new ways of working. They can also further employ customer communication management services to enhance client relationships. And while these critical processes are being optimised, they can invest more of their time and resources in core business activities and driving the organisation into the future.”