Financial Services institutions continue to face challenging macro socio-economic conditions, cost and profitability challenges and regulatory pressure. Organisations also need to make choices given the risks and opportunities from cross-sector disruption, whether through exponential technologies, potential new entrants or industry changes. To survive and prosper, firms must consider how they will respond, transform how they think and operate – in other words, they must get fit for the future.
Breaking this down into the 2 key words:
Fit - firms should consider suitability, sustainability and success. These are about assessing how to remain relevant and meet the desired outcomes from growth revenue and market share in chosen ‘core’ products and services.
Future - look at the 5 year horizon to commit to a strategic view and understand the steps to take to move towards that objective.
So where do organisations start? Organisations need to re-think their strategy along the value chain, focusing on their strengths, and be ready to transform and partner, in order to deliver the value proposition.
By taking an aggressive view and identifying non-differentiating activities, organisations can begin to deliver these more efficiently, by focusing on 4 main levers:
1. Client Centric Simplification
By putting customer and business outcomes first, organisations need to move from fragmented and complex to simplified and flexible operating models with product innovation embedded in the organisation. Organisations need to focus on profitable business activity, elevating the client experience, increasing automation and intelligent decision making.
2. Data and Insight
As execution is increasingly digitized, organisations must be able to capture and store data arising from market activity in a usable manner, integrate it with external data, apply evolving data science techniques to generate actionable insights and deliver increase in margins.
3. Platforms and Partnerships
Firms must embrace the changing market dynamics where outside providers offer services. This requires firms, in some cases, to move away from in-house service delivery to one that draws on the capability of ecosystem partners to create cost efficiencies and risk mutualisation. Moving towards more open and API based architecture to help deliver efficiencies.
4. Modern Workforce
Digital disruption will create the need for new roles and skills. Firms must identify ways to acquire and develop talent which are responsive to the fast-evolving needs of a digital business, operating in a culture of innovation, diversity and enhanced analytics, both in terms of “run” and “change” the bank activities.
Over the coming weeks and months, Baringa will publish a series of blogs across these 4 themes and across the FS sub-sectors, including global markets, banking and insurance. For further information, or to get more insight along these themes, please contact lucine.tatulian@baringa.com
Related Insights
UK payments outlook: the five trends to look out for
We explore the five key trends and predictions we expect to see in the payments industry over the next 12 months.
Read more
The role of regulators in accelerating Web 3 innovation
Financial institutions are seeing the potential that Web 3 technologies can offer but need the regulatory guard rails to have the confidence to commit.
Read more
TNFD: Are you prepared for biodiversity reporting?
With the new TNFD draft disclosure metrics, we look at what nature-related information banks have included in their 2022 reporting.
Read more
What can banks learn from the 2022 climate disclosures?
As the 2022 climate reporting cycle gets underway for the UK banks, Baringa has performed a benchmarking exercise and extracted the key themes and insights that are appearing.
Read more