Other parts of this series:
- Agility is the strategic imperative for financial services firms
- Financial services needs to speed up efforts in the agility race
- To win in agility, financial services firms need to strengthen stability
- How to rewire financial services for true agility
- How to rewire leadership, governance and funding for true agility
- How to rewire culture, workforce and organisation for true agility
- How to rewire channels, operations and technology for true agility
- Agile in financial services: No silver bullet, no panacea
- Navigating the agility journey in financial services
In my first post of this series, I explained why enterprise agility matters to financial services (FS) organisations: that it is a strategic imperative in an ever-changing, disruptive environment, with significant potential financial benefit. While our extensive research shows the FS industry is second only to software when comes to adoption of agile methods, it also shows that banks and insurers are lagging behind in true enterprise agility.
When it comes to speed, the velocity and adaptiveness score, of FS firms, there are four key elements to consider: 1. Speed to market, 2. Responding rapidly, 3. Exploiting opportunities, 4. Staying ahead.
Accenture’s FS Agility Index Study found that FS firms fall below the 50th percentile on all of these key elements. Insurance scored the lowest (16th percentile), with banking (43rd percentile) and capital markets (48th percentile) faring better. The overall ‘speed-to-market’ score of the industry is just below average at 47th percentile; ‘responding rapidly’ came in at 37th percentile; ‘exploiting opportunities’ and ‘staying ahead’ scores are much lower, at 30th and 26th percentiles, respectively.
Put simply, when there is an opportunity or threat to respond to–or a strategy to be executed–most FS firms are simply too slow to react.
In the age of digital disruption, speed of change in the market is a constant. Across banking and insurance, we’ve seen the limited disruption caused by savvy new entrants to the market such as Starling, Ripple and Lemonade. Korea’s social messaging platform Kakao proved that the disruption could be on a much larger scale when it signed up 1.5 million customers to the bank in the week that it launched.
While a disruption to the entire value chain is unlikely, clearly it is no longer impossible, either. The days of ‘wait-and-see’ approach are over. A majority of FS organisations are aware of this new reality. In our 2017 FS Change Survey, 79 per cent of FS executives said shareholders expect the benefits of change to be delivered within 18 months or less.
But FS leaders also need to put speed in the context of high volatility. Historically, big players have been able to speed up their change efforts during stable times; but they tend to be wary of uncertainty and struggle when conditions become unpredictable. As the digital world becomes more volatile, a combination of velocity and adaptiveness becomes crucial.
One of the more interesting results of our Transformation GPS Study is that the velocity and adaptiveness scores for middle management and business unit leadership are significantly lower than those for executives, team leaders and team members. Re-engaging these middle managers by effectively delegating decision-making will be critical in achieving true enterprise agility in FS.
Yet speed isn’t the only essential factor to success in enterprise agility. Just as in riding a bike, speed needs to be accompanied by stability. Too much speed without balance and you will fall off your bike.
In my next post, I will look into why FS firms aren’t stable enough and how they can strengthen their foundational base.
To learn more, register to download: Enterprise Agility in Financial Services: The New Strategic Imperative and listen and subscribe to our podcast, Talking Agility.