Other parts of this series:
- Agility is the strategic imperative for financial services firms
- Financial services needs to speed up efforts in the agility race
- To win in agility, financial services firms need to strengthen stability
- How to rewire financial services for true agility
- How to rewire leadership, governance and funding for true agility
In my last post, I explained why financial services (FS) firms should speed up their agility efforts. But speed without stability eventually leads to a fall. In a highly regulated industry like FS, firms cannot afford the economic and customer consequences of a fall.
Based on our Transformation GPS Study, FS is in the ‘At Risk’ quadrant of the Agility Index. The industry is both slower and less stable on average than our cross-industry benchmark of 220 organisations across 50 industry sectors.
According to Accenture’s FS Agility Index Study, FS firms score in the 41st percentile for a foundational base, with the three sectors—banking (34th), insurance (42nd) and capital markets (44th)—achieving similar individual ratings.
This may come as a surprise for an industry that has emphasised stability, resilience and compliance since the 2008 financial crisis. However, there is more to a foundational base than creating stability through prudent risk management. A strong organisational backbone is the product of effective leadership and culture, governance, coordination, prioritization and resource allocation.
In an age of disruption and volatility, perhaps the most paramount to a foundational base are leadership and culture. The traditions FS firms relied on in generations past such as complex governance, hierarchy and strict controls are not effective in eliminating the uncertainty caused by the turbulent conditions of today. Navigating this new landscape will be more about organisational alignment through vision and purpose, authentic leadership and a strong core of talent.
When it comes to the six factors that make up the foundational base, FS firms fared relatively well in avoiding politics (54th percentile) and living the code (46th percentile) in our FS Agility Index Study. However, the study revealed they were still weak in competing on cost (43rd percentile) and paying competitively (38th percentile).
Of particular concern in the findings are attracting the best talent, where FS scored in the 35th percentile and having the time, training and resources to ensure quality service, in which the industry ranked 26th. As the industry struggles to attract and retain the younger generations as both customers and employees, this one is an important obstacle to overcome.
For success in enterprise agility, banks and insurers must increase both speed and stability. As with riding a bike, too much stability without speed and you don’t go anywhere.
In my next post, I’ll explore why true agility is so elusive for banks and insurers and how to rewire businesses to sustain an elevated level of performance.
To learn more, register to download: Enterprise Agility in Financial Services: The New Strategic Imperative