PwC’s study “The Leadership Edge” gives an in-depth view on how to perform a successful transformation project of the front office business processes in order to identify, engage, serve and retain customers. The financial services sector is under particular pressure to transform, but too few financial services businesses are successful. What can they do better?
In our study “The Leadership Edge”, we surveyed more than 700 senior leaders and front office transformation experts, across eight countries and nine industries, on their direct experience with transforming the front office. All respondents had completed a Front Office Transformation (FOT) within the last five years; however, as our study shows, there was quite a disparity in the perceived success levels. What is the difference between a good Front Office Transformation and a poor one?
Involve the leaders
One thing is clear: senior leadership involvement drives Front Office Transformation (FOT) success. 68 percent of companies whose senior leadership team was actively involved in their FOT said the project was successful – in contrast to 45 percent of those without active involvement and support from the top.
Customers today have an unprecedented amount of choice; as a result, they demand tailor-made products and services that meet their requirements and provide unique customer experiences. If companies want to maintain their edge and strengthen their market position, FOT is a must. This is especially true for financial services businesses, as they are under huge pressure to transform. It is more important than ever to use digital technologies to build trusting relationships with customers through more meaningful touchpoints in sales, marketing, and customer experience. Today’s customers expect everything from mobile banking apps to robo-driven financial advice, and organisations that cannot live up to those expectations will be eclipsed by old and new rivals.
To keep up, these companies are investing heavily in Front Office Transformation. However, too few financial services businesses execute FOT with complete success: only 44 percent of companies in the sector say that they have been successful in transforming their front office, and the majority (55 percent) claim to have been only ‘somewhat successful’. Banking fares somewhat better than insurance, where only 30 percent of companies say their FOT was a success.
Everything starts with culture
Our research shows that financial services companies could take three significant actions to improve FOT:
- foster transformation culture,
- improve guidance from the top management, and
- nurture employees.
Although these three areas must be addressed simultaneously, everything starts with culture. A staggering 99 percent of financial service providers said that transformation was a major cultural challenge for their employees. And less than a third say that they knew exactly what kind of culture they wanted to build with their FOT work. This has led to the view among employees that transformation is not something to be taken seriously: nine in ten financial services companies say that employees saw their FOT as a side project, and not as a major company initiative. And just 27 percent say senior management was fairly or heavily involved in FOT.
This could explain the overall lacklustre transformation performance of the sector. Developing a people-centric culture is a key success factor in FOT, and it can be achieved through greater engagement at the top. To really make their FOTs effective, financial services businesses will have to ensure that their senior leadership not only endorses the project, but also actively participates in it.
In addition, companies in the financial sector should explore new ways to encourage every customer-facing staff member to embrace transformation projects. Currently, financial services companies are more likely than most of their counterparts in other sectors to rely on traditional classroom training to get staff on board with transformation – so there is definitely room for improvement. FOT must be seen as a company-wide and business-critical project that affects every member of staff and needs the involvement of each and every one of them.
Boost the transformation dividend
Many financial services companies face the challenge that their senior leadership is not sufficiently involved in transforming the front office. Greater engagement from the top may help to close the culture gap; without it, employees may not fully embrace transformation. That will cause FOT to fall short of fulfilling its potential, and in the ferociously competitive financial services sector, partial success is not good enough.
- The involvement of senior leadership is the one single factor that most determines whether FOT is successful or not.
- Only 27 percent of financial services businesses say senior management was fairly or heavily involved in Front Office Transformation.
- 99 percent of companies in the financial services sector stated that transformation was a cultural challenge for their employees.
- 91 percent say that employees saw their front office transformation initiative as a side project, and not as a major company initiative.
