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Why modular financial banking means flexible candidates

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The digitalisation of the economy is changing consumer expectations of service providers, including those in the financial sector. Increased digitisation and innovation is leading to increasingly modular services, which in turn need creative leadership and a new kind of flexible candidate.

What do the consumers of financial services want?

And what do consumers want? More technology, greater flexibility, and a more personalised approach suited to their ever-changing needs. To engage more with customers, companies in the financial services sector are adopting the more innovative and agile approach that have become a staple of tech start-ups: mobile technologies and apps, data analytics and digital channels.

Meanwhile, financial services companies are also keeping and improving traditional and 'physical' channels such as local branches, to offer multiple ways to connect and retain client loyalty.

Financial services are becoming “modular”

Global management consultancy Oliver Wyman argues that financial services are becoming modular as a result – with digital distribution platforms, new product providers, alternative sources of capital and a growth in outsourcing fundamentally reshaping the industry.

Chris Allchin, co-author of the Modular Financial Services: The New Shape of the Industry report, published in January 2016, told me that one of the consequences is that companies within the industry will have to be less self-contained as they reach out to well-informed, savvy customers who increasingly select the services they need from a mix of different companies.


The new modular demand means that product providers no longer own the direct customer relationship


“New technology is making it easier for customers to buy from multiple product providers. The number of financial products used by the average customer is increasing,” he said. The new modular demand means that product providers no longer own the direct customer relationship, with consumers easily picking and choosing from multiple providers, possibly through a mobile application, aggregator or online platform.

On the other hand, Allchin also explained that the new modular landscape has implications on the supply side too, with financial services firms using more third party suppliers to create scale efficiencies or to access expertise that is too difficult or too costly to build in-house.

“Providers of specialist services, back office processes and risk capital can now seamlessly plug into a supply chain. New entrants have new, focused business models,” continues Allchin. One example is in fund management, where almost all support services can be bought separately, from custody and research to fund administration. This means that cross-industry cooperation is becoming increasingly common.

The need for financial industry leaders with vision

It is widely expected that in the new financial services landscape, rapid automation will render many positions obsolete. “Costly, inflexible legacy infrastructure will be unsustainable in a modular industry. Many firms will need to overhaul their back office processes and systems,” notes Allchin. He also believes back office jobs are not the only ones at risk, but all the positions that could be improved through automation.

However, Allchin points out this will also create new opportunities, with work in some positions adding more value, requiring good decision-making skills – not just the execution of a task. “In credit analysis for instance, the emphasis may be more on data analysis and making the right call, rather than compiling the data, a task which can be executed by computer programmes.”

With the rise of big data and tools that will help companies offer a more tailored approach, such as social media analytics, strong numeracy, analytical and technical skills are essential, with developers, cyber security specialists and data analysts already in great demand. However, mass automation will not take away the most valuable part of human input that no machine can really perform: making the right decisions based on all this data.

“Historic leadership skills will not be sufficient,” the authors of the Oliver Wyman report said. “A firm’s top 200 executives will face different challenges and need a broader set of characteristics. Operating models will have to be redesigned into supply chains, working closely with a wide range of external partners. Metrics will need to focus more on value provided to customers and less on short-term returns. A successful mind-set will embrace change.”

In other words, candidates must show a willingness to embrace change and an ability to quickly adapt to it, whilst displaying a collaborative mind frame. Does this sound like you?