The “Royal Commission into Misconduct in Banking, Superannuation and Financial Service Industry” uncovered fraud, bribery and mis-selling of products & services.
Customer and community trust are at an all-time low; social licenses have been revoked. Similar to last year’s class action by Slater and Gordon, other law suits against players in the financial service industry are expected.
In addition, regulators will enforce rules more strictly and issue heavier fines. Financial service institutions will also face increased cost/income ratios due to remediation costs for past misconduct and lost litigation cases. Revenue will decline due to the constricting housing market and tightened lending practices.
These trends point to slim years ahead for the financial services industry. However, successful organisations will set themselves up to stem the tide and emerge stronger afterwards.
The preparations these successful organisations undertake will include:
Focus on customer expectations
Identify customer groups that received bad advice or unsuitable products (for example, interest-only loans), and proactively contact these customers. Work together to find a solution.
Risk & compliance management enhancement
Simply complying with regulations is not enough. Prepare strategies to manage key business risks across the organisation in a standardised way. For example, implement responsible lending including identification of key lending risks for organisation & customers. Revise lending standards and enforce them along the entire value chain.
Reduction of organisational complexity
Review product design, management and sales operations; eliminate unnecessary products, services and process steps. Focus on customer outcomes.
Cost reduction programs, including engagement of 3rd party service providers
Enhance the outsourcing risk management framework. Identify low-cost locations and centralise business activities to create synergies.
Retain earnings for future expansion
Prepare market expansion strategies that maximise benefits for the organisation, shareholders and customers equally. Execute these strategies when competitors are struggling to meet their own challenges.
Organisations preparing themselves for success in lean times will be able to retain market share and rebuild their reputation. They will also enhance both when unprepared competitors struggle with organisational complexities and high cost base.
ABOUT THE AUTHOR
Egbert is a transformation manager with more than 14 years of experience in leading large scale, complex initiatives impacting multiple locations across Wealth Management, Retail & Corporate Business and Investment Bank.
In addition, Egbert was business risk manager for the retail & corporate business responsible for risk assurance of new business and outsourced activities.
His background in complex business transformations and non-financial risk management enable him to streamline organisational structures to increase efficiency, decrease complexity while maintaining sustainable risk assurance and regulatory compliance.
Clients, stakeholders and peers respect his hands-on approach combined with in-depth understanding of the business. Egbert has proven exceptional leadership skills in not only generating synergies to manage challenges but also in advancing his team members development.