There are still plenty of challenges for organisations in the Financial Services sector.
The impact of technology and changing customer expectations continues to create headwinds across nearly all aspects of business.
And with CEO concerns about the lack of trust at an all time low, companies are finding it hard to make their voices heard or get their engagement strategies to stick.
Despite these uncertainties, FS CEOs globally continue to see the glass half full: 86% are confident about their company’s prospects for revenue growth over the next 12 months.
We outline three themes to show how global business leaders are tackling the key issues facing the sector today.
FS CEOs globally are worried about talent. Almost three-quarters see the limited availability of skills as a threat to growth.
And they’d be right: the issue of talent in Financial Services is both complex and pressing.
On the one hand, technological advances have increased demand for people with skills in robotics, engineering and analytics.
Yet uptake of those technologies is also leading to redundancies in other parts of the business: 42% of global FS CEOs who plan to reduce headcount next year said it’s largely the result of automation, the highest result of any sector.
But it’s not all bad news on the job front - new jobs and skills will be required to replace these roles.
At the same time, it’s becoming increasingly hard for companies to find the ‘human skills’, the ones that can’t be replaced by machines. Well, not for now, at least.
For example, 90% of global FS CEOs say creativity and innovation are important to their organisation, but almost as many say it’s difficult to find people with these skills. The same applies to leadership, emotional intelligence and adaptability.
And as customer behaviours continue to evolve, along with expectations for greater customer-centric products and services, demand for employees with these human skills will only increase in the future. We’ll also see more people and machines working side-by-side.
So how are Financial Services leaders dealing with this challenge? What are they doing to make sure their people strategies address the skills gap, manage human-machine interaction and keep their businesses ahead of the competition?
Many FS CEOs - 60% globally - are rethinking the HR function completely. They recognise that future workforces will require brand new ways of thinking, operating and collaborating.
Forget about tinkering around the edges of the HR function. FS CEOs need to figure out very clearly how and where value gets created in their organisation’s human system, and then focus on that.
Greater diversity allows Financial Services organisation to better reflect, understand and engage with the increasingly diverse set of clients they serve. It also broadens the range of ideas and experiences upon which key decisions and new commercial innovations can be made.
Despite the many benefits of D&I, barriers remain. To capitalise on the opportunities diversity offers, CEOs must lead a fundamental change in mindset, rethinking everything from culture, values and biases to agile ways of working and how performance and potential are judged.
Our findings show 66% of FS CEOs globally are concerned about the lack of trust in business, which is more than in any other sector.
Are CEOs doing enough to tackle the issues that just won’t go away and where does ‘trust’ sit in their agenda?
In Australia, the banking system has a very good record of keeping money safe, which leads to high trust levels. By contrast in recent years, concern about delivery of Financial Services have raised legitimate questions about whether those in FS always live up to Australian standards of fairness.
This has led to almost daily media, political and regulatory scrutiny. Historically, this attention would wax and wane, intensifying at times of market stress and controversy and dissipating with the return of better times.
We see trust emerging as a permanent concern and believe this is unlikely to change without a different approach from the industry as a whole. This means cultivating, sustaining and defending stakeholder trust levels on an ongoing basis.
Understanding and addressing the causes of declining trust will also improve investor sentiment, relationships with regulators and engagement with employees, all of which underpin organisational resilience and performance.
Given its complexity we believe there is unlikely to be a 'quick fix' to trust in Financial Services.
Nevertheless, CEOs and boards can show greater leadership on redressing the issue at the root cause by reviewing the following three dimensions:
Interested in understanding the drivers of trust and five key steps about how to take action? Read our Hot Topic on Trust.
CEOs in Australia – across all sectors – recognise the importance of focusing on the customer: it’s the number one thing they’re strengthening in order to capitalise on new opportunities.
But the global picture for Financial Services tells a slightly different story, with the customer experience ranking third, behind digital and technological capabilities, and human capital, as a key pathway to growth.
With all the talk about customer centricity, it seems that FS CEOs globally are still struggling to really put the customer front and centre, despite the fact that almost every Australian bank is pursuing such a strategy.
To really connect with their customers much more deeply than they have in the past, Financial Service companies (and particularly banks) need to become simpler and smaller, and more deeply connected to their customers. This means having fewer points of contact, fewer marketing messages and fewer products that are easier to understand and compare.
Technology can help, but organisations need to be absolutely clear about their priorities: which ‘customer journeys’ are the most crucial to satisfaction, and what outcomes have highest priority to enable?
For example, automation of routine tasks can be used to both drive down costs and free up employees to spend more time with customers. Predictive modelling, machine learning and other advanced analytical capabilities can be used to create more personalised and relevant solutions for customers.
Organising technology around customers, as opposed to products or channels, allows for improved customer engagement as well as opportunities to grow the business. In the future, customer intelligence is expected to be one of the main predictors of revenue growth and profitability.
The growing influence of FinTech on the financial services sector is staggering: more than 80% of sector executives globally believe institutions are losing revenue to innovators and start-ups.
Instead of standing by, incumbents are embracing the disruptive nature of FinTech by increasing their efforts to innovate internally, partnering with FinTech firms, buying their services, and in some cases, buying the firms themselves.
There’s good reason to do so, but to capture the full value, incumbents need to integrate their legacy systems with the more agile systems of FinTech companies to be able to provide new customer-centric digital experiences.
Preparedness for success in the future industry landscape will be driven by those that show leadership on trust and develop better relationships with customers.
We help organisations build trust with their customers by taking a business-focused approach, bringing together transformation, performance and robotics process automation skills together in one team. For more information on redesigning and digitalising your organisation's key customer journeys or for information about upgrading your digital or direct platform, contact us.
Financial Services Industry COO
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Leader - Insurance
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Leader - Superannuation
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Leader - Asset and Wealth Management
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Leader - Banking and Capital Markets
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Leader - Financial Services Diversity and Inclusion
Tel: + 61 2 8266 6471
National Thought Leadership Leader
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National Thought Leadership Manager
Tel: +61 2 8266 0252