How do you enable your firm to change continually in the post-COVID world?
To maintain their role in the Financial Services industry, banks, funds and other institutions need to get good at managing continuous change. Most of them first need to change the way they see financial technology companies (“fintechs”) and manage projects. The world is increasingly uncertain, because of COVID as well as trends like digitisation. Firms in Financial Services need to become more adaptive and should consider partnering with fintechs offering innovative solutions that they cannot or do not want to develop in-house.
Managing continuous change with Fintech partnerships
The term Fintech emerged in the years after the financial crisis that started in 2007, the Credit Crunch. Arguably, Fintech is a series of responses to the traditional financial system failings. It emerged for two reasons: The Credit Crunch and technology such as Open APIs, Big Data, AI and Blockchain, which reached a mature stage at that time. Fintech includes Crowdfunding, Digital payments, Insurtech, Robo-advice, Cryptocurrencies, Automated Trading and more.
Many fintechs started after the 2007(8) financial crisis and aimed at replacing the traditional financial system. They are now partnering with established institutions. Fintechs learned that for most of them the best opportunities are in making traditional institutions better, rather than replacing them. Regulation and distribution are two of the advantages (unfair, some argue) established institutions have, making them difficult to beat.
(However, some financial institutions will be replaced. Eventually, policymakers will have to deal with the “too big to fail” problem – and push their financial regulators for market regulation that will lead to the orderly replacement of large banks with smaller, more agile banks or entities providing better banking to a wider customer base. The financial system needs to become less efficient and more robust, resilient, and modular. Ideally antifragile.)
Managing continuous change with a Virtual PMO
Firms need to become “change-ready” organisations that grow or evolve, adapting to and managing continuous change. They need to apply project management best practices to the change effort, continually. They could set up a Project Management Office (PMO). One that could be relatively light in scope, but ideally independent (not part of IT); with a mandate that includes facilitating partnerships with fintechs. You could even call it the Change Management Office (CMO).
It could be either based at the head office – or virtual. The most extreme version of a Virtual PMO (CMO) does not employ staff. It uses an online repository for project, programme (related projects) and portfolio management processes, and training. It can help firms make the first step into managing change on an ongoing basis, with consistency. In addition, it is a low-cost option to implement, run. You can run any PMO with existing office software (Microsoft or other) if you want.
Most projects lose focus in the execution phase. And, as firms grow or evolve, too many projects are started and fail. It is then vital to assess projects continually and as a ‘portfolio’, in a systematic way. At the corporate/ business level, the performance of individual projects is not critical. It is acceptable that some fail. What is critical is that the whole portfolio performs well enough to achieve the intended overall strategy and all stakeholders’ expectations are met.
Ultimately, success will depend on the cultural change needed. Business units and departments staff must work together to make the transition from a business-as-usual to a change-ready organisation. To make this work, you need mutual respect and trust across the firm.
Perhaps the first step now for financial firms (larger banks in particular) is to replace the old business mantra ‘Grow or Die’ with a new one: ‘Change or Die’. Change may still mean growth for smaller banks and other institutions. Bearing in mind that, when approached wrong, growth can destroy value – and make climate change worse.
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Managing continuous change in Financial Services
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