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Historically, financial services (FS) organisations have not regarded their change capabilities as a core competence. In this new world of volatility and constant change, developing an enduring professional change capability will be of paramount importance to the survival and growth of every FS enterprise.

This change capability should reflect the change vision and portfolio priorities of each firm. For the last ten years, the portfolio focus has been on cost and regulatory, but we are seeing a renewed focus on digital and customer change. Most FS firms are beginning to shift away from large programmes to a mix of continuous change and large transformational efforts. Many have also extended the use of scaled agile instead of relying on waterfall delivery. All of this requires a diversity of capabilities and will necessitate both business and technology change that come together rapidly in multi-disciplinary teams.

In my previous posts analysing the results of our FS Change Survey 2017, I pointed out that change leaders (those who implement change faster and better than their peers) have a clearer vision and direction. I also talked about how they put an emphasis on the human factor, the role of leadership and the importance of culture.

Underpinning all of these winning qualities is a stronger change capability. These FS leaders develop a professional change capability that allows them to execute change with greater pace and discipline.

Our FS Change Survey reveals that elements of a professional change capability include having a dedicated change management function; providing the right skills, methods and tools; as well as creating a more comprehensive digital strategy and capability both developed internally and sourced externally from key partners.

Most FS firms (80 per cent) have a dedicated change management function and the benefits are clear: they put greater emphasis on discretionary change programmes and achieve a higher proportion of benefits from them.

Organisations that do not have a dedicated change management function (17 per cent of the survey respondents) are slower to change and realise benefits. Our FS Change Survey found they are far less clear in the business benefits of their change portfolio. They have a less clear strategic change vision. They are less likely to put significant resources into preparations to enter and service new markets and workplace transformation. These FS firms are less likely to have strong governance of change program execution.

Almost all change leaders have a dedicated change function, and when asked to rank themselves – 30 per cent of change leaders felt their change capability is ‘industry-leading’ (vs. 13 per cent of their peers).

Change leaders report their FS organisations have a diverse range of professional change skills and capabilities (90 per cent vs. 60 per cent of their peers); consistent set of change management methods and tools (84 per cent vs. 60 per cent) and strong governance and transparency (87 per cent vs. 61 per cent).

And even with those diverse skills and capabilities, our survey shows, organisations still seek strategic partnerships. Change leaders are more open to working with external partners (62 per cent vs. 54 per cent) and a number have managed-services arrangements for change (45 per cent vs. 26 per cent).

Change leaders also have understood digital faster and have a clearer strategy. One of the stark findings from our FS Change Survey is the disparity between leaders and followers when it comes to approaching digital strategically. 87 per cent of leaders have longer-term strategies, balancing both internal digitisation and external digital channels.

New channels are critical for these FS leaders: 63 per cent agreed that their digital strategy is focussed on new channels, e.g. mobile, and enhancing existing channels (e.g. tablets in branches and chatbots for centres).

When it comes to deciding whether to create the digital capability from outside or inside the firm, the leaders are taking a dual approach – with separate digital units or digital attacker brands (78 per cent have carved out a digital challenger) – and work to digitise the existing organisation (91 per cent vs. 54 per cent).

While the digital units or digital attacker brands are great ways to cut new ground with fewer constraints of risk, legacy and mind sets, they are also challenging to scale. For real commercial impact on the core of the bank or insurer, its services and customer relationships need to change.

Digitising the existing organisation can be like wading into a swamp of legacy complexity. So this must be prioritised and digital decoupling can help, whereby legacy platforms are isolated for slower speed change and faster digital capabilities established on top of these.

Building a professional and organisation-wide change capability is a challenging journey, often compared to changing wheels on a moving car. Business operations and change programmes do not stop while you are improving your organisation’s change capability. The successful FS firms of the future will be the ones finding the right balance between transforming the core and rotating to the new.

To find out more about the Financial Services Change Survey or to join our FS Change Director Forum, please contact me here, or @AndyYoungACN.

To learn more, register to download: Professionalizing Change in Financial Services.

You can read more survey results here.