10 Sep Driving competitive advantage through a new investment banking culture
Substantial progress has been made in stabilizing the financial sector since the crisis six years ago. Yet a great deal remains to be done. The focus of the newest issue of Frontiers in Finance is on navigating change and transformation. In the issue we address the complex financial services landscape and some of the principal transformation issues senior executives are struggling with today.
Developing strategy doesn’t get any easier. Although the immediate ordeals of the financial crisis may have been overcome, new and even more disruptive challenges are looming. Over the next 5 years, financial services institutions are likely to experience an extremely rapid period of profound change in their external environment. The response to the crisis has been focused on increased regulation, changes to corporate structures and business models and the need to find new ways of generating earnings in the context of prolonged yield depression. These have placed heavy burdens on everyone involved in the industry, but especially on those in senior executive positions. The problem, though, is that developing effective responses may have crowded out the capacity to step back, to reflect deeply on how best to meet the future demands of customers over the coming period of change.
There’s no doubt that strategic thinking is increasingly vital. Technology is evolving more quickly than ever. Reliance on social media is becoming ubiquitous, not only for casual conversation but also for corporate communication and business processes. Consumers are increasingly demanding constant, online access to every service. In turn, the explosive growth of information technology and communication is generating vast quantities of data about customers, markets, products and preferences – which will be invaluable to those companies that learn to exploit it.
These trends are accelerating. So it is more than ever critical to ensure that the vital task of absorbing the current regulatory overhang is not the sole focus of attention. The very real challenge of getting fit for the ‘new normal’ has to run hand-in- hand with preparing both for short-term disruptors and for the impact of long-term megatrends. In the first category, we have already seen significant inroads made into the traditional financial services industry by companies such as Apple, PayPal and others. In the slightly longer term, the industry will see major impacts from demographic and social change, and from the increasing consumer tendency to value ease of transactional operations over enduring relationships and brand loyalty.
