Addressing change in the financial services sector

Nowhere in business is the impact of the accelerating rate of change more apparent than in the local financial services sector. Dave de Villiers, sales executive at Unisys Africa ETS Global Financial Services, says this escalated rate of change introduces new challenges and opportunities.

A number of new regulations have been introduced affecting the local financial services industry, accelerating the pace of change in the sector. Each of these offers challenging deadlines for compliance. Some are still evolving, with compliance criteria continuing to change.

Another area of looming change is the potential for new competitors in this market space. Putting aside the question of who acquires whom for the moment, the entrance of one or two significant international banking groups - such as Barclays and Standard Chartered - will have an impact on the dynamics of competition in the financial services sector.

Players of this magnitude can and do adopt the approach of re-writing the rulebook and potentially going after previously untapped market segments with new service offerings. New initiatives in this space have the habit of creating a flurry as other local institutions react to counter them in order to close any competitive window of opportunity.

These external changes force internal changes to address the potential impact on each institution`s client base. The internal changes required can be broken down into two basic groupings: one, the direct changes needed to address the specific change; the other, those indirect changes needed to cope with the implications of the direct changes.

If we accept this duality of change and re-examine the scope, nature and magnitude of just the two areas identified above, it becomes apparent that the internal changes required - both direct and indirect - will be significant in terms of both their impact on the organisation and their cost to implement. Any errors in selecting a corrective action have the potential to further multiply impact and cost.

What is required is a mechanism to assist in determining the impact of these indirect internal changes, a process further complicated by the likelihood that any implications will overflow beyond just those areas impacted by the direct changes. Once these implications are determined, an organisation is faced with how best to address them.

The phrase: "There is more than one way to skin a cat" holds true in this case. Each implication is likely to have a number of alternative approaches for resolution - each with its own implications to the organisation - cost being just one of these.

The real challenge facing the local financial services sector is how to determine the impact of change, how to identify its implications and, most importantly, how to select the most appropriate approach to counter these implications.

To use a medical analogy, one can treat symptoms or one can treat the cause. Treating symptoms leaves the underlying cause unaddressed, while treating the cause usually sees the symptoms disappear.

What is needed is a process toolset - or methodology - that adds system to the analysis of cause and effect and provides the necessary traceability to enable tracking cause and effect linkages that cross organisational structural boundaries - both laterally and in the vertical plane.

This traceability should incorporate aspects of business strategy, business processes, applications and technology platforms. The logic behind this is: implications of change know no boundaries.

If we accept the conclusion that the rate of change is accelerating and that there are more and more implications of change that need to be addressed - for the good of the organisation, if nothing else - then any mechanism that can reduce the risks inherent in change by providing a higher probability of success, should be on any institution`s radar screen.