Keeping pace with change in a cloud-enabled world
In an industry wrapped up in regulations, with legacy systems and processes, change can seem near-on impossible. But for an increasing number of institutions in Financial Services, change is happening in large-scale ways. At Microsoft Future Decoded this year, we heard from a panel of experts about their experiences in Financial Services, and how institutions can make big changes. So, here’s Tanya Andreasyan, Editor at Banking Technology, Ronald Kent, UK Finance Managing Director, Financial and Wholesale Policy and Genevieve Kangurs, Head of Digital Transformation Office at TSB to give you the inside scoop on innovation, change and technology.
Among technological, political and economic changes, it’s no surprise that the pressure’s on for financial institutions to change too. And slowly but surely, it’s happening. There are many institutions trying to change – but it’s not always for the right reasons. Sometimes it’s for the sake of press, publicity and marketing. Sometimes it’s so organisations can say ‘me too’, and keep up with the others. And when this happens, change is rarely understood properly. Leaders don’t know why they should be changing, what the process should be, and what the overall impact on their organisation might be.
Behind all of this change is technology. It’s both helping and making financial institutions change, adapt and innovate. According to Genevieve Kangurs, for TSB, technology is the enabler. TSB wants to build a bank for the 21st century, with the right platform, processes and people in place to support that vision. And it’s taking the approach of understanding why and how to change – rather than focusing on solely what it wants to achieve. It’s vital to think about how you’re evolving and transforming your organisation, to prepare yourselves for the upcoming changes.
Making change in a traditional market
PwC recently surveyed CEOs across a number of different markets, and found that 81% of CEOs from the banking and financial institution space are significantly worried about the pace of change, especially with regards to technology. When you’re working in an industry where organisations haven’t changed significantly in around 100 years, accelerating – or even starting – change is a big issue.
One of the foundations behind successful change is culture. While technology is a vital part behind transformation, you need the right culture in place to make it successful. Genevieve advises financial institutions to be clear on their vision, and know what cultural change must happen to help the business adapt. At TSB, the customer was put at the heart of everything – rather than technology. The organisation focuses on what customers need, want and where they struggle.
All cultural change must come from the top down. Senior management and the board of directors must have 100% buy-in for it to succeed. Institutions must clearly communicate to people on the ground, clearly defining and explaining what the behavioural and cultural changes include. Everyone in the organisation should understand what they’re and why. Technology alone can’t solve all your problems, but when combined with culture, in a comprehensive and coherent way, you’re on the road to success.
But it’s not just legacy systems and traditional processes that block change. Ronald Kent states that financial institutions need to bring regulators on the transformation journey with them. You need to be shoulder-to-shoulder: they must agree with your changes and understand what’s going on, if they’re going to review and allow them in an agile, timely fashion.
Competition – or ‘co-operatition’?
The term ‘co-operatition’ may be the best model for a successful Financial Services market. Instead of out-and-out competing with each other, should financial institutions look at how co-operating could lead to the same successes? The emergence of fintech, new players and new business models has many traditional organisations worrying about their futures – but the key could be working together.
Genevieve believes it’s key to understand what benefits partnering and co-operating can bring to the customer, and which organisation can bring them. TSB is evolving from focusing on products, to focusing on experiences – and that’s where Genevieve believes the biggest changes will be to begin with. She gave the example of photography. Once, you would go out and buy a disposable camera to take photos. Now, you simply use your camera phone. The photos themselves haven’t changed, but your experience of them has. The early days of open banking will see a transformation on the experience-side of finance.
Tanya Andreasyan points out several examples of this in the UK already. Santander and Kabbage have teamed up to give a better experience to SME customers. As an SME, you could be waiting for weeks or months to get a loan. But with the Santander and Kabbage partnership, you could get a loan approved in a matter of hours, with instant access to the capital.
Fintech companies classify themselves as being born in the cloud, and have the increased agility that many traditional institutions are seeking out. So, will cloud become vital for all organisations, if they want the same ability to adapt and be agile? Genevieve stated that cloud is an enabler, but again, the key to agility and adapting an organisation to swift reactions is culture. Successful organisations will be those who can modify and develop their culture in line with technology. Ronald says organisations must look at what’s stopping them from being agile. Culture is the first place to look: are your people stuck in old ways, or are they happy to adapt and get on with new challenges? Secondly, what’s getting in the way? Do you have the tools to be agile in a practical sense? While culture is important, you do need the right technology to deliver agile solutions.
Look everywhere for inspiration
While there are new business models in the market that are doing well, Tanya says from what she’s seeing, there’s no definite winning model. There are notable examples of institutions finding the right niche and addressing specific problems, and she believes that’s where success lies. For example, there’s Aldermore. This organisation found a pain point in that big banks don’t service SMEs well. So, they addressed the issue and solved the problem, with great success.
Genevieve says to look at this from three angles. Firstly, it’s important to see what other institutions are doing. Secondly, you need to understand what your customers’ needs are and what their pain points are, and be relentless about removing them. Thirdly, you need to understand what the job to be done is. You need to know where new opportunities are coming from, and know how the game changing. She believes it’s wise to look outside of Financial Services for this, and see how other organisations are doing well. For example, data-driven experiences are vital to TSB, so they look to Spotify and Netflix inspiration.
In a cloud-enabled Financial Services market, there are opportunities everywhere. It’s just a matter of finding the right technology, and building the right culture to support it.
See how TSB is advancing its digital transformation, with our help
