The digital revolution has prompted traditional financial services firms to spend huge sums on updating their IT systems and transforming their business models. Yet one thing they are trying to achieve which cannot simply be done by throwing money at the problem is to emulate the flexibility of the fintech start-ups.
The small firms which are new on the scene have massive growth trajectories and are “agile to the core”, says James Smith, director of Mobile and Digital at Nationwide. In the meantime, the larger players are making big investments and implementing new technologies and ways of working, with the aim of getting some of that agility into their own organisations.
“We are in this place right now where we are asking if the smaller players can scale fast enough, and retain their agility, or can the larger players change their operating models and get the agility customers are expecting?”
Traditional financial services firms which are trying to change their ways of working will not achieve this by accident, warns Mr Smith, speaking on a panel at the recent Finovate conference in London.
“These ways of working are deeply ingrained and the muscle memory is really strong,” he says.
The big things can be straightforward, rather it is the thousands of little things that make the difference. “If you don’t get those right then they are going to be a massive sea anchor on your progress,” says Mr Smith.
Teamwork
The plan for Lloyds Banking Group over the next couple of years is to prioritise customer-focused solutions, explains transition director Jo Brown. “How do we empower our colleagues to deliver end to end value to our customers? It is difficult because everything that has made these people successful until this point is not going to work going forward.”
She explains how the traditional banking mindset has rewarded the individual, with a focus on outperforming colleagues. The focus from now on must be for team, rather than personal gain, insists Ms Brown.
While the big banks are trying to emulate the flexibility of the fintechs, the start-ups are trying to achieve the scale the traditional players are able to call on, she says. But it is human resources available which proves the common thread, she says. “Everyone needs the talent.”
Powered by people
It is important to recognise that with all this change going on, you are dealing with people, says Thierry Derungs, chief digital officer and head of digital solutions at BNP Paribas Wealth Management.
He explains how many of the new ways of working which BNP Paribas are trying to foster are connected to its “factories”, the internal sectors of the business which act as incubators and accelerators and push out initiatives. But the number of people working in those factories is limited. “So the challenge for wealth management is to push these new ways of working to those who are not working in the factories,” he explains.
There are various ways of doing this, he says, highlighting the “game in a shoebox” which the firm has created and sent out across the business. “We use it to explain what is agility, how to co-operate on design and so on, to push those topics out there. It is working well and we have produced 100 boxes.”
The French firm has also migrated its Paris headquarters to a flexible office approach, not to reduce the number of seats and gain room, but to allow better collaboration, insists Mr Derungs. “Having our CEO sitting in the open along with everyone else shows how strongly we believe in agility and collaboration.”
What can prove harder is fostering a spirit of collaboration between people working in different geographies. “It is tricky, but possible, and that is where technology can come in,” he says.
People do gain a lot from working together, says Mr Derungs, but it is important to consider the strain that can be placed upon managers who have to push all of these changes through. “They face a difficult task,” he says. “Show them they are not in danger, rather they are an important part of the process.”
