The Bankwatch

Tracking the consumer evolution of financial services

The Enterprise of the Future in Financial Services | Five traits

Here is another study on the characteristics of financial services required to survive.  IBM is always thoughtful and this one is no exception.  They entitled the piece as applying to Financial Markets, but I have interpreted this to apply to Financial Services, generally, and not just say money markets.  Since they spoke to 1,000 CEO’s I think that assumption is reasonable.

The enterprise of the future in the financial markets industry | IBM

What will the financial markets enterprise of the future look like? To answer that question, IBM spoke with more than 1,000 CEOs from around the world. These conversations, together with our statistical and financial analyses, provide a unique perspective on the future of the enterprise. During this critical point in the market, five core traits of the enterprise of the future revealed through our study provide important implications for the financial markets industry—an opportunity, if not a mandate, to reevaluate business and operating models.

The enterprise of the future in the financial markets industry (188KB) – pdf

The central point is that this is no longer business as usual, and whether startups or old businesses, the traits mentioned are core to survival.

The five core traits of the Enterprise of the Future revealed in the IBM Global CEO study hold important  implications for the financial markets industry as it navigates one of the most financially devastating
periods in history

The five traits [only partial implications shown here – click through to IBM for full report]

  1. Hungry for change

      Implications:  … having the right governance, culture and incentives will allow firms to manage change, not simply react to it.

  2. Innovative beyond customer imagination
      Implications: … Moving slowly on this trend puts firms at risk of losing clients to innovators that are improving client collaboration and segmentation capabilities …
  3. Globally integrated

      Implications:  To drive faster and bolder innovation, employees need the means to collaborate openly across organizational fiefdoms. And despite the industry’s bias toward proprietary intellectual capital and a do-it-yourself approach, market realities are making external collaboration even more crucial.

  4. Disruptive by nature

      Implications:  Firms must also nurture a series of innovation programs that span multiple business
      model areas and include industry-changing plays. In this industry, perhaps more than most, technology will serve both as an enabler and an instigator of business model innovation.

  5. Genuine, not just generous

      Implications: Their negative reaction to client and regulator demands for increased transparency and ethical behavior may be causing financial markets firms to underestimate a major financial opportunity. We believe industry leaders will find ways to grow their bottom lines while being a socially responsible role model. They’ll not only work to become more “green” and invest in social causes, but also eliminate incentives that encourage unethical behavior inside their own ranks.

Relevance to Bankwatch:

The most intriguing part for me about this paper is that none of these characteristics come natural to any financial institution.  There are a couple of exceptions for one or two of the points and while I accept that, I can think of no institution that has all five.  This particularly applies to big banks.  Any exceptions within individual traits would be in the Credit Union world.

All five traits require a deep look inside the culture of the organisation, and the ability to see yourself as others see you.

Written by Colin Henderson

October 23, 2008 at 09:31

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