Who will lead the banks of the future?

09 mei 2018

Who will lead the banks of the future?

As Dutch banks respond, with varying success, to evolving customer needs, what types of leadership are required? Marco Nijenmanting and Bram Tijsseling, Co-leaders of the Financial Services practice at Odgers Berndtson, Amsterdam, answer some frequently-asked questions.

Which trends are most common in banking in the Netherlands right now?

Marco Nijenmanting (MN): “The trends we see right now in banking are twofold and focused on tech/digital transformation. Firstly, improving the internal organisation, and then transforming the face of the bank towards clients. Secondly, banking is seeing a change from physical banking to mobile.”

Bram Tijsseling (BT): “The success of a financial institution, bank, insurance company or anyone that offers financial services depends on how good the customer experience is. Fintech companies are the front-runners in this. For example, N26, a bank account for your phone, Yolt, an app for consumers to manage their funds, Tikkie, a free app to send payment requests to friends, family or acquaintances, and Klarna, an online payment services for e-commerce sites in order to eliminate the risk for buyer and seller.

“Clients want their needs to be met in real-time. In private banking you see a transformation of the traditional relationship banking model towards digital-based banking, these banks are asking: ‘How can I be successful for more affluent clients through digital technology?'".

Which are the banks that seem to ‘get it’?

MN: “You see two banks jump out. In the Netherlands this is ING. They believe it is the customer experience that will set them apart. To achieve this, they want to innovate faster than others, use advanced data intelligence to understand their customers better and meet their changing needs and think beyond traditional banking to develop new services and business models.

“Another is DBS Bank in Singapore, Asia’s best bank and the world’s best digital bank. They have spent the last three years deeply immersed in digital and have re-architected their digital agenda, leveraged Big Data, biometrics and AI. They conduct around 15,000 digital training sessions yearly for their employees. They have a mobile wallet app with over 300,000 users and created an all-in-one digital wealth management platform that allows customers to manage their wealth and stay updated on market trends while on the go, among a range of other offers.

BT: “Technology is moving very fast, and any technological edge a bank has can now be copied within a few weeks or months by the competition. It is therefore important for a bank to have a clear profile with regards to others. It can differentiate through its strategic position, profile and approach to the market. The leaders of tomorrow should be able to shape such an evolving profile. “

How has the workforce in banking evolved?

MN: “The largest challenge remains to ‘flexibilise’ the workforce if there is such a word. While it has changed, lots of employees from the ‘baby boomer’ generation remain. Can you create an agile organisation with a generation used to working for the same employer their whole lives and expecting to be done at 65? “

BT: “This applies to the Board, too. Do they have the mindset to adapt to a situation where a bank’s competitors are not necessarily other banks, but technology companies and start-ups in fields of payments, mobile wallets and lending?

MN: “The current workforce clearly has more technological knowledge and skill, and grew up during a time when there was relatively more freedom, options and not that many obligations, relative to the ‘baby boomer’ generation that was confronted with a different situation. Such a generation is used to having opportunities and the means to do things themselves. You have to direct them in a different way.

“Current leadership and workforce are increasingly looking for a purpose: ‘What is the goal of an organisation and/or financial institution, why are we doing this?’.  A good leader should be able to give substance to these types of questions.

“ABN AMRO is focusing on purpose and sustainability of the organisation. Rabobank focuses on the world food problem, from their cooperative, agricultural background. The perspective is ‘we are this kind of an organisation and we contribute to these things’.

This helps with securing talent and leadership. It helps with connecting an organisation’s purpose to an individual’s motivation.

“The challenge for a leader is to give substance to such a purpose, to propagate it, to inspire and motivate.”

What type of leadership will this new challenge require?

BT: “You need leaders that can translate an evolving need of clients into technological solutions. They need to be able to drive innovation, implement technologies and connect a certain expertise to the business. This requires leaders willing and able to connect.

“Sustainable investing is an important factor. Clients want more insights into where their money is being invested, and they want a choice in this matter.”

MN: “These are the developments that leadership should be aware of and join in on. They are witnessing innovation and digitisation impacting their business, and there are the needs of the customer, the sales department and the front office that need to be met in a better way. Banks will have to become smarter, faster and more effective through the use of new technologies.

“The decisive edge a leader needs is agility, the capacity to be quick and flexible in changing situations on a strategical, tactical and operational level.”

BT: “They also need to think about how to drive empowerment: ‘How do I direct my people, how will I ensure they perform at their highest capacity?’

This requires less of a directive leadership style and more of a coaching one. 

“If you are able to switch gears quickly, and can see the impact of changes and how they impact your organisation and your people, then you can be successful. Leadership that is still holding on to planning and strategy for the next five years and does not consider outside influences, will not survive.“

Where does Odgers Berndtson fit into the picture?

MN: “Our job is to help translate strategy into leadership. We come in when clients have set a course for their organisation and are looking to add skills and capabilities that can further develop that direction. Or on the flipside, when they are looking for people that can define strategy and direction, and subsequently shape an organisation.“

BT: “We believe the Financial Services industry is open to new forms of leadership. The financial crisis is behind us, and the focus should be on how to reshape financial organisations for the future.“