Mark Record, Strategic Account Leader for financial services at Capita, sets out a roadmap to success for the sector in a post-Coronavirus world.
A few key themes are emerging across many financial institutions and our clients are starting to think about their emerging state – how their world will look post-pandemic:
- How will they act differently?
- How will they re-model their businesses?
- What help will they need?
The first common theme is that strategic priorities are shifting. Many banks and other financial providers are reviewing the priorities that they set at the beginning of the year or even last year. Are they still important in today’s environment? What are the new opportunities and priorities needed to survive and thrive?
The second is the thirst for data and near real-time reporting. Every day the Government is probed on its data accuracy, for example the ‘R’ factor and track-and-tracing data. The need for accurate and trustworthy real-time data is now important to all of us, in all our daily transactions.
The third is that many banks and financial services providers are seeking ways to significantly drive down their operating costs. This is because their revenue streams are unpredictable and are affected by forces beyond their control, such as interest rates and consumer behaviour.
Choosing the right priorities will be critical
So, what could be on the must-do list for 2020 / 21? I’ve spoken to several executive clients and board members, and here is my starter-for-10 priority list:
1. Improving customer experience through trusted data, APIs and AI will become critical to:
- improving personalisation
- improving fraud detection
- improving complex back-office functions such as risk management
- improving fulfilment and obliterating processes and all at much lower cost.
2. Updating your IT operating model to serve your customers better
- Greater adoption of the ecosystem model. Mobile banking brought everyday banking on the move, now ecosystems integrate our everyday lives with banking. They bring many elements of modern platform services such as cloud, explainable AI and open APIs together into one seamless journey.
- Spend time giving your team real purpose so that they deliver greater value.
- Does your current operating model enable effective software development from home?
- Does it support agility and collaboration?
3. Moving to trusted and real-time data and de-fragmenting customer, operational and corporate data
- Is it time to truly tackle those legacy issues and create normalised ‘golden sources’ of data?
- Fragmented data is usually the true root cause of poor customer service and experience, inefficiency, increased risks and out-of-date reporting.
4. Establishing true and effective partnering
- Helping clients to build their knowledge and seconding capabilities will become more important.
- Aligning interests and avoiding self-interest.
- Take stock of your partners. Who has stuck with you in this crisis and has been willing to ignore the contract and do the right thing?
5. Preparing your core IT architecture and infrastructure to connect to everything because customers will demand it
- Open banking has created a need for more open architecture, and, in time, customers will choose those companies they trust to provide value for money.
- Invest in open API architecture.
6. Increasing cloud and Software as a Services adoption because going it alone is no longer an option
- Sharing infrastructure services and driving down the costs is important but only if it provides the resilience, recovery and security required to support 24 x 7 digital services.
- Continually examining your appetite for risk will be important for knowing when to shift to a broader shared services model. Many banks can no longer afford an in-house model for things such as cyber security so shifting to a more economical and viable shared services cost model is an imperative. Examine the commercial, technical and emotional barriers to making this shift.
7. Ensuring your leaders are purpose-driven and can build the workforce of the future
- Are your leaders aligned and ready to deliver the new priorities?
- Are they engaging and motivating their workforce?
- Are they choosing the right partners with aligned interests?
8. Making sure you have access to enough talent to execute quickly and with agility
- Is your workforce ready for the ‘new normal’?
- Do you have access to enough SMEs at the right time?
- Do you have partners and a contingent workforce to supplement your teams and are they aligned to your purpose, strategies and values / ethics?
9. Creating new and recurring revenue streams
- Companies with recurring revenues can weather economic storms far better than those with fixed revenue streams. Can you supply products that are subscription-based and attractive to customers?
10. Investing in forecasting and simulation tools to tackle the increasing unpredictable market and the problems that it creates
- Strategic planning is an uncertain world. The pandemic caught most firms by surprise. How ready will you be for the next one and what will you do different next time?
- Do you have data scientists analysing trends so that you can anticipate and perhaps avoid the next challenge, or at least react quickly?
- Can you dynamically stress-test your change portfolios with leading indicators?
- Develop an agile strategic plan that delivers over shorter periods and allowing pivots where necessary, rather than committing to a long, inflexible delivery programme whose direction cannot easily be altered.
Do fewer things better and faster
Keep things simple and don’t become overstretched. Doing less has been happening naturally during the pandemic but don’t be too eager to overstretch now that things are opening up more. Make sure that you prioritise viable activities and continually re-test this viability. Avoid complexity wherever possible.