The Challenge of Market-wide Transformation

The pressure for transformational change is often felt across a whole market sector. External factors compel all organisations to pursue similar transformational outcomes, and a rash of similar initiatives becomes apparent across the market.

Market dynamics such as this create both risks and opportunities for individual organisations: move quickly, with accuracy and certainty, and there is a competitive edge to be had; move more ponderously, or without setting up for success, and you are likely to be left behind.

Such dynamics can be seen in several sectors (for example, healthcare and life sciences, logistics and ecommerce, entertainment and leisure). Whatever the sector, when such pressure for concurrent transformation is felt, there are many common challenges to overcome, some of which we outline below.

In this article, we focus on financial services. The trigger for sector transformation in this case has come from government which has recently indicated a desire to double the size of the mutuals sector, citing the following objectives:

• To serve members rather than shareholders
• To boost local economies
• To increase business diversity in the marketplace
• To support the housing market
• To improve financial inclusion and community reliance

With over £150bn revenues and £200bn insurance assets spread across building societies, insurers, co-operatives, friendly societies, and credit unions, this is already a substantial sector. The ambition to double in size demands significant activity, with a number of challenges emerging.

Key challenges

Regulatory impediments. Currently, smaller organisations in the mutuals sector are broadly subject to the same regulatory requirements as the giants of the UK financial services industry. This lack of a ‘level playing field’ could inhibit competition.

Significant shifts in capability. For example, moving away from traditional ‘branch network’ models to the digital channels and offerings demanded by customers requires different skills and expertise.

Ever-increasing customer expectations. Modernisation activity will never be ‘once and done’. Members (and prospective members) continually experience innovation with other FS organisations (e.g. same day mortgages) and other B2C businesses. They will expect their mutual provider to keep pace.

Despite these challenges, for organisations in the mutuals sector, now is the time to transform. The opportunity is clear but such a transformation is undoubtedly an ambitious step for most in the sector.

Shared opportunities and requirements

The upshot of all this is that most organisations in the FS Mutual sector are looking at the same opportunities, such as:

• How to rid themselves of legacy and technical debt: the systems and processes that have served them well for years, but which are now creaking and no longer fit-for-purpose (you can read more about this in the Further Reading section below)
• How to embrace new technology to provide new digital offerings
• How to better manage data to provide greater insight and performance
• How to do all this whilst adhering to regulatory requirements

Taken together, these considerations have led to a significant and widespread investment drive for legacy modernisation, re-platforming and migration, technology investment, and data strategy and exploitation.

The partner imperative

Many organisations have change expertise in-house, yet the need to deliver BAU and to keep the lights on alongside complex change activity means additional capability and capacity is required. Filling such resource gaps piecemeal is possible, yet often leads to ‘fragmentation fatigue’, where ensuring moving parts work together in harmony can quickly turn from daily challenge, to drama, to crisis.

Experience has shown us that organisations with such a transformation challenge, and no prior track record of similar change, require a delivery partner, rather than simply a supplier of resource, or a piecemeal ‘DIY’ approach to resourcing.

Such a delivery partner must bring the following characteristics if efficient, effective and sustainable change is to be delivered:

Deep and relevant expertise: through people who have worked in the sector and grappled with similar challenges before. Beware! The mini-glut of demand across the sector will attract generalist opportunists – both service providers and individual contractors.

Value, flexibility and the right ways-of-working: for many organisations their transformation will be a ‘once in a lifetime’ event and there may be only one shot at success.  Precious investment needs to be spent optimally and carefully using a partner that recognises this – supporting full-time delivery or part-time assurance as required.

Tailored approaches: one size does not fit all with transformation, proven approaches can be the starting point, but they will need to be adapted to suit the context.

Desire to not out-stay the need to remain client-side: The partner must augment delivery capability and capacity, at the same time shaping and aligning the client’s need to build self-sufficiency at the end of the transformation journey.  The partner must fit in, stand out, but never outstay their welcome.

Trust and independence: Such a a partner should act and advise the client as a long term advisor, guiding leadership to build awareness, confidence and avoidance of common pitfalls.  Transformation delivery may involve many parties and providers, and the right delivery partners will act as the ‘glue’ ensuring alignment and setting all involved up for success.

In essence, what transforming organisations need is a partner that demonstrably works client-side, enabled by a flexible delivery model that can be tailored to each client’s unique circumstances and business drivers.

Further Reading:

You can read more here about the challenge of Tackling Legacy Technical Debt.

You can read a brief case study here describing our recent work helping to stabilise a major re-platforming programme,

You can read more here about Partners in Change’s Financial Services journey.