I think everyone would agree that the old ways of doing business must change.
The economic turmoil of the last few years has opened Pandora’s box in terms of new competitors, new regulations (and the looming potential of more regulation), and a range of other factors that will impact how financial services firms do business.
One question we ask ourselves, our customers and our peers is: ‘are you ready?’
More often than not, the answer is ‘no.’ After all, despite leading most other industries in technology investments, most banks and other financial service firms are little different from other organisations in the extent to which they are handicapped by their inability to act in a timely manner.
In 2010, we commissioned a study by research firm, Vanson Bourne in which most respondents acknowledged that their operations did not respond quickly enough to be competitive. The top three problems were that those organisations lacked real-time visibility, were constrained by application and information silos, and lack operational control.
While I think insight is critically important, without the ability to act, all the insight in the world is of little benefit. For all intents and purposes, financial services firms are operating in the dark. They need what I like to call, “Operational Responsiveness” and what analysts call, “Intelligent Business Operations”. These are technology-enabled business concepts that are particularly well-suited for financial service operations that face increasing regulatory scrutiny in the crucible of a highly competitive market. Operational responsiveness is about more than IT agility and it’s more than optimization, too; this is about decision makers having visibility into operations and into the very conditions that drive operations – and then being able to respond before those conditions affect their business. Simply put, leaders need the power to act on the knowledge they glean.
The financial services industry is undergoing major changes at both the macro and micro levels. Regulators are demanding major adjustments to how firms do business and are also demanding that firms provide transparency to ensure they are compliant. Given the public outcry about complex financial instruments and their supporting operations – and the economic damage attributable to that opaqueness – we are all but guaranteed that the old way of operating will need to change.
No doubt such change will be disruptive, but change also represents an opportunity for those firms that can capitalise on the new conditions created. New conditions mean new winners, and losers, as well. In my opinion, the losers are those who refuse to acknowledge those very changes.