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Change is the New Risk: Will Change Run the Bank?

How to create and capitalize from 'sweepChange' in your organization

"It’s confusing, what’s going on with Wall Street right now. News is rife with cost cutting and massive lay-offs as revenues continue to fall due to low market volatility and drops in trading volume. Yet, the pressure to invest and spend is unrelenting as a result of the continuously strong S&P, generally favorable market conditions, the possibilities of emerging technologies, and the continuous regulatory mandates. This pressure to invest and spend is feeding banks’ appetites to continue to grow professionals who can strategize, visualize, communicate, and implement massive Change Programs. Cut costs or invest? How can a financial institution simultaneously do both?

Will change run the bank?

Massive upheaval in almost all sectors of the financial markets, from trading to lending to payments, would be enough to push Change requirements to the forefront. Add on top of that, technological advancements that are disrupting the market, and forcing new thinking for traditional banking issues, and you have a challenge for any entity wanting to succeed. Twenty years ago, no one ever heard of a ‘Chief Risk Officer’ and now it would seem negligent not to have one, but increasingly banks are looking toward Change Professionals to drive organizations and set priorities, especially in the new digital world. Could ‘Change Officers’ be destined for the C suite?

 

A looming shortage of dedicated change professionals?

Banks are investing in Change. Demand for Change Professionals from consultancies by banks is strong and a predicted 5% annual growth is leaving some asking whether the financial industry will actually experience a shortage of talented Change Agents in the coming year. Equally concerning, many senior line managers and desk heads, lacking formal Change Management training, are being asked to execute multi-million dollar Change Programs crucial for banks to comply and compete. With this in mind, it has never been more important for banks to find and nurture Change Leaders that can bring together multi-faceted and multitalented groups to drive and communicate Change across organizations.

The new Change Professional needed will be a disruptive, creative service thinker, yet also steeped in industry knowledge. This type of Change Professional will perhaps be answering conventional questions such as, “How do we improve our post-trade servicing of OTC derivatives?´ with more questions, such as “Is there another way to process derivatives?” or “Do we even want to build a capability to service OTC derivatives in-house?” Getting strategies for comprehensive Change Programs right, from the beginning, will be imperative. The need to align potential warring factions will be inescapable, to assure the delivery of programs that will quickly start adding to, rather than detracting from, bottom-line.

 

Silo-ed change vs sweepChange

Silo-ed Change Projects, aimed at allowing individual business units’ processes and technologies to limp past the latest set of regulatory mandates will not win the long-term game for banks. With industry demands beginning to call for clean data, cutting edge analytics and total trade transparency, the time has come to move Change decision making high enough in the organization to address and eliminate ad-hoc Change Projects once and for all. Just as regulators ‘sweep’ proposed regulations through an industry to mine for opinions, suggestions, and optimal design ideas, a bank must understand how incremental changes in varying business units might be optimized and applied to affect the overall and future management of the firm as a whole. A ‘sweepChange’ approach allows a senior change function a comprehensive view of proposed Change Work within an organization. This allows all efforts to be prioritized and optimized, making short-term goals forward reaching, and eliminating costly, interim work that is eating away at already anemic industry margins. Change Officers are over-due for their day in the sun, and have got to find a seat at the table if silo-ed Change Efforts are to be unified into effective, comprehensive Change Programs.

How to create and capitalize from 'sweepChange' in your organization
Employing a sweepChange approach promotes putting top-tier Change Management capabilities at senior levels of your organization. This ensures collaborative transformation, and a Change Team with a clearly defined growth strategy and career path for personal success because Change is not a core competency at most banks. Change Professionals struggle to see a clear path to senior managing director roles. Rewarding Change Professionals and presenting tangible career goals is of pivotal importance for banks’ financial competitiveness and strategic advantage going forward. Additionally, because Change roles are increasingly complicated, the people responsible for Change at banks must constantly be assessing new technologically enabled market structures and solutions to determine their relevance and importance to ongoing Change Programs.

 

Capco's unique approach - changeSource to sweepChange

Capco has had unprecedented success developing Change Teams within clients. With a unique methodology encapsulated in “changeSourcing”, Capco has originated an approach where internal consulting teams at banks are actually “re-badged” and rolled into Capco’s own change organization, which provides training, and rewards growth and accomplishments in transformational roles. Many of the banks’ Change Management professionals remain involved in, and pertinent to, the client’s initial engagement program, but also have the flexibility to be redeployed elsewhere in the industry to govern change, if immediate client needs taper for some period of time. This arrangement creates the ability for Change Talent to remain a revenue creator, rather than a cost center for banks, and allows them to integrate into the industry’s newly respected battalion of Change Professionals. Capco’s North American practice has already ‘re-badged’ more than 150 individuals as part of their changeSourcing initiatives, and the assessment by those involved in the process have been extremely positive.

Banks are caught in a vise of rising change costs and decreasing revenues. Due to industry regulation, a public outcry for transparency, and a consumer market demanding digital solutions at lightning speed; Change Management is critical for banks. Change Programs, including scores of underlying project streams, are costing banks 100’s of millions of dollars, and it’s important that they be led by individuals trained and experienced in Change. The cost savings, successful regulatory compliance and captured market share that effective transformation programs can deliver are not only desirable, but mandatory for banks moving forward. Incremental, ad-hoc updates to present processes and technologies, will fail to create the environment necessary to nurture architectures and innovative solutions demanded by customers of the future. Banks should be looking for new partnerships with established yet leading Change Agents, bringing new thought to traditional issues. At Capco, our flat management style, agility and commitment to entrepreneurship means that fresh ideas are harvested and implemented at speeds consistent with emerging market trends. Together with our pledge to superior delivery and seamless Project Management, changeSourcing and sweepChange concepts are allowing Capco to help clients transform in ways not possible using classic consulting models. Future challenges will take a new prototype of banks’ partnering with Change Agents to produce world-class capabilities, and Capco is poised to support banks going forward."