The path to resilience for financial services organizations

In response to dynamic macroeconomic shifts, leading financial institutions are revamping their resilience strategies. This strategic overhaul is driven by a need to adapt swiftly to changing conditions, prompting a demand for seasoned senior leaders to spearhead these initiatives or bring in fresh talent who can.

In this article, we examine:

1. The macro conditions leading to this strategic planning spree
2. Which profiles are best equipped to lead these new resilience initiatives
3. The takeaway for organizations interested in building their operational resilience

The financial services industry has kept a close watch on macro conditions that could impact their businesses. These include volatile economic conditions, rapid technological advancements and climate change, to name a few. Fortunately, resilience planning has become a central pillar of most organizations’ strategy and, with the right plan in place, acts as a safeguard against external disruptors.

The way different financial services organizations create and implement such strategic plans varies widely, but hiring senior leaders is often the first step. Establishing a robust senior leadership team capable of planning for a multitude of macro scenarios is the best way to begin your strategic resilience plan, and these individuals usually carry experience in two fields:

Risk management:

Risk has long been a key area of focus for all financial services firms. The risk management function is responsible for assessing threats to the business and establishing a plan to ensure operations are unaffected should those threats occur. Heightened by the bank collapse earlier this year, we’ve seen a rise in demand for risk management consulting, and this experience is often sought after by organizations hiring for their internal risk management function.

From the increase in extreme weather to continued/increased cybercrime to interest rate increases, financial services organizations must be mindful of these conditions and how they could alter the strategic priorities of the business.

Operational transformation:

In 2023, we’ve heard the phrase “tightening our purse strings” more than we’d like to admit. Economic uncertainty has driven the need for companies to ensure that all their dollars are truly having a positive impact on the top and bottom line. Operational efficiency has been a big topic for financial services firms.

After the boom post-COVID, organizations are more focused on cost than ever to ensure they are eliminating waste while at the same time positioned for growth when the market turns. Additionally, digital transformation continues to be a core focus for financial services this year with the continued rise of digital banking, Insurtech and Fintech more broadly. Customers demand excellence when it comes to a firm’s digital capabilities and the experience that it provides.

The takeaway:

Financial services organizations have long been focused on strategic and operational planning due to the sensitive nature of their products and their impact on consumers’ day-to-day lives. In 2023, we saw a focus on building operational resilience given that concerns were heightened as banks and insurance companies face threats like economic uncertainty, cybercrime, extreme weather and more.

While it may seem contradictory to the “tightening of purse strings” comment, effective leaders will continue to be crucial in establishing operational resilience that addresses these challenges and more to propel financial services in the future and ensure they are poised for growth when the market turns.

To learn more about our capabilities within financial services and strategy, contact Jacob Watkins at (336) 217-9151 or jacob.watkins@charlesaris.com.