The future of financial services: Part 2

The pre-COVID inclination for incremental change and cautious experimentation has given way to a faster digital metabolism in the financial services sector.

Organisations must not only reimagine their processes, but also embed a people strategy that champions agility and instills the innovation needed to better meet customer needs.
 

In the first instalment of this mini-series, we explored the current trends within the industry, detailing the opportunities and threats in the form of ‘Super Apps’, digital currencies and a desire for more streamlined and sustainable operations.

In part 2 and 3, we’ll consider the implications of an evolving market and emerging technologies, offering our insights on the challenges ahead and the progressive workforce strategies and solutions that organisations should ‘bank on’ amid a new era of finance.

Bigger isn’t always better: Finance is one of the most interconnected industries in the world, with many banks overseeing operations on a global scale.

But for many key players, size is no longer a source of clear competitive advantage. The rapid evolution of digital technologies and a need for new sources of growth and profitability means that the market is favouring the institutions that can respond at pace, with the skills and strategies to leverage the scope of change.

The challenge for many incumbent banks will be incorporating agility into an organisational architecture that has traditionally favoured rigid hierarchies and risk-averse practices.

What this means for your workforce strategy: Many organisations, in the banking world and beyond, are flattening structures and decentralising authority in a bid to boost the metabolic rate of operations.

As organisations face mounting pressure to work rapidly, release products often and change them constantly, companies are adopting a more flexible infrastructure that encourages accountability and streamlines the lifecycle of products and services.

These structural shifts must be matched by a more strategic approach to talent attraction, management and retention. Many banks are integrating contingent workforce solutions at scale in order to inject much-needed agility, creativity – and capacity.

Organisations of all sizes will need to consider how they expand their workforce ecosystem to include non-permanent talent, from contractors and freelance staff to members of the ‘Human Cloud’.

Those who pivot quickly will be best placed to navigate the seismic shifts currently surfacing in the post-pandemic world of banking, from branch closures and back-office automation to the opportunities in high-growth economies such as China, India or Mexico.

The Not-So-Wild West: In part 1 of this series, we explored the proliferation of digital currencies and the need to incorporate these forms of finance, including cryptocurrency and Bitcoin, into existing models.

Having moved into the mainstream, the ‘race to regulate’ is now underway. For governments and legislators, the challenge will be overcoming a previously ad hoc approach and attitude towards digital currencies, wide-ranging definitions and the ambiguity of assets.

Although much of the regulatory framework is still in development, most countries have now found ways to tax gains and income derived from the ‘crypto’ universe, and yet more legislative changes are on the horizon.

What this means for your workforce strategy: For many banks, the implications are two-fold.

The first, and perhaps more pressing concern, is to keep abreast of changing regulations and restrictions. While tighter regulation may offer greater guidance, it also reduces the tolerance towards those who do not abide by such rules.

The challenge facing many banks is how to disseminate this information to an increasingly diverse and disparate workforce, and the complexity increases for organisations operating on a global scale. Communicating the nuances of payment and tax to colleagues in Canada (a country that has approved bitcoin exchange-traded funds) will differ to the advice given in Mexico, where cryptocurrencies are currently prohibited.

Organisations must implement defined processes for implementing emerging regulation, with communication channels and training materials that can flex to the speed of change.

As attitudes shift across the globe, banks must also adjust their appetite towards risk. With a rising number of consumers eager to incorporate digital currencies into their wealth portfolio, those organisations looking to better serve their customers may need to consider adopting and advising on digital currencies in a bid to remain relevant.

Technology could lend a helping hand here, with some organisations opting to invest in ‘robo-advisors’. Equipped with the ability to process data at an enhanced rate, these chatbots can offer asset allocation support at a lower cost, making investment strategies more accessible to all.

A holistic workforce strategy that balances the implementation of emerging technology alongside securing the talent to facilitate adoption will be necessary to ensure organisations can leverage the full benefit of 'bots’. Project Mangers, for example, will be central to assessing the scope and direction of change and overseeing implementation, while Developers will play an important role in reviewing and refining both process and performance.

Companies must consider how they can source, attract and retain the individuals who will be pivotal to their AI-powered advancement.

The challenge of change

As banks settle into a new era in which bigger doesn’t always equate to better, many traditional organisations will need to review and realign their workforce strategies, opening the door to a growing contingent labour market and global talent networks.

In the final part of this series, we’ll tackle two more challenges facing the financial services sector. We’ll consider the implications of a digitally driven future, the skills needed to boost productivity and our insights into how organisations can compete at a time when tech talent is in short supply.

To discuss how the team at Enterprise Solutions could support the evolution of your workforce strategy, get in touch today.