No business is immune to change, whether planned or unplanned, or driven by internal or external factors. The financial services industry is a great example. Here, change can take various forms, from the introduction of new regulations to the expansion of a customer base, the launch of a new product and perhaps most important of all in this fast-moving sector, the need to assimilate mergers and acquisitions. Whatever the change, in today’s evolving financial services landscape, the key question is – how quickly and effectively can a firm react to the situation at hand?
Time to get flexible
The most complex change that many financial services organisations have to address is the need to assimilate mergers and acquisitions, an issue that has been high on the priority list across the sector for many years. Having flexible IT infrastructures in place is key here to ensure seamless change management. Unfortunately, this is something that most banks and other financial services organisations continue to struggle with.
The prevalence of mergers and acquisitions over recent years means that many firms have overlapping or conflicting IT infrastructures. They have built up complex systems with new applications bolted on as and when necessary to meet the demands of the business or to deliver new services.
The trouble is that while these fragmented systems run effectively day in and day out, if faced with change it can often be a long hard slog to initiate new processes. Some applications and technologies may be so old that they aren’t even supported by the supplier anymore but nevertheless remain mission critical to the firm.
As Richard McCarthy, UK head of banking at KPMG, puts it, “In particular, technology is mission critical to the future health of the [banking] sector. Banks are essentially large technology companies and currently many of the operating systems are archaic.” Firms that have had their IT infrastructure and supporting strategic plans bolted on top of each other are not able to quickly move to a new customer base, market or product. So what’s the solution? Here are some top tips as to how the sector’s firms can address the issue.
Get help to change before you grow too large
If you are an expanding firm, you need to get the right flexible strategic plan in place before you grow too large. You are unlikely to have the IT skills or resources required to prevent or control the problem as your business and, by extension, your IT architecture grows. The cost of employing external consultants may seem expensive now but by the time you really need help you are likely to have spent many times more money than you would have done if you had acted faster.
Put a fexible plan in place
If you have a flexible business strategy, you can plan around likely scenarios and integrate these plans into your long-term strategic goals. If you decide to merge with another firm or perhaps move your call centre to a different country, these changes could be made achievable under the scope of the existing plan to minimise upheaval. By creating a plan with adaptability at its core the integration of IT infrastructures or drive to meet new local communications and legal system requirements stops being such a headache.
Communication is key
With the long-term economic outlook improving, but still uncertain and on-going scrutiny over banking practices, there are growing calls for IT to be regulated across the banking sector. If you want to steer away from future sanctions by the regulators, you need to show that you are taking control of your IT infrastructure by implementing a flexible blueprint, built to cope with rapidly-changing customer requirements.
By implementing a flexible long-term strategic plan, you can also demonstrate to key stakeholders your commitment to future-proof the business. By taking a long-term view to achieve goals and clearly communicating these, you can help ensure future success.
Take action now
With the economy recovering now is the time to invest to ensure you are prepared to meet the added demand an upturn will bring. Recognising that infrastructure change needs to fit in with long-term objectives is vital and can be outlined throughout a flexible strategic plan. However, when looking for flexibility, it is important that you do not compromise on control and that your infrastructure remains robust.
The advice I would give any bank or financial services organisation is: don’t delay. You need to start developing a data or integration layer as soon as possible since this will prevent the inevitable point-to-point interfaces which are so difficult to reverse as a technology environment grows.
To ensure they are working in as effective a way as possible both now and in the future firms need to gain a holistic view of existing strategic plans and IT infrastructure and establish how they can move forward with the introduction of an adaptable strategic plan with long-term goals and a moveable IT infrastructure.
Change is inevitable and financial sector firms need to be ready for it, whether it has been on the cards for some time, through a planned acquisition, for example, or thrown at them at the last minute. It’s survival of the fittest now; customers are fast running out of good will and getting in shape to succeed today and into the future means thinking smart and planning to be adaptable.
Mark Holland is a founding partner of Holley Holland