10/28/2015

Are Your Leaders Managing the Changing Tides, or is no one Steering the Ship?

Amiee Ball October 28th, 2015

Change is the law of life. – John F. Kennedy

The banking industry is changing — radically and at warp speed. But instead of someone stepping up to take charge, banks have been languishing with no one at the helm of their careening ship. The scope and pace of change in the environment in which banks operate is dizzying, and only banks themselves seem to be out of step. Too often, change, when it occurs for most banks, is slow, reactionary and lacking in direction. Personally, I chalk it up to leadership. Yes – I said it…LEADERSHIP. In fact, there is an old Navy SEAL saying that “there are no bad boat crews, only bad leaders.” Take a look at the demise of any organization, and I guarantee the same indicators of obsolescence: stagnant, ambiguous, and sheer lack of direction.

Community banks and credit unions can’t continue this way. To survive in an increasingly complex and competitive marketplace, bank leadership must decide to change INTENTIONALLY. It’s time for a polar shift in how financial institutions manage change, and it needs to begin at the leadership level. The most successful bank leadership teams view change management as a critical core competency. It’s time everyone adopted that perspective.

Change in the banking industry is:

  • Inevitable – As consumer expectations evolve and the marketplace changes, banks will also change — or perish.
  • Mandatory – Regulators, responding to consumer concerns, will continue to mold the industry, requiring banks to adapt in order to meet regulations.
  • Desirable – Intentional, directed change can be a good thing … if it allows a bank to remain competitive in the continually evolving marketplace.

The Realities of Change in the Banking Industry

Progress is impossible without change, and those who cannot change their minds cannot change anything. – George Bernard Shaw

Change in business occurs in two ways: It can be reactionary, driven by forces outside the bank and guided by leaders with a clear vision for the most effective, efficient way to respond to those outside forces. Or, change can be forward-thinking to identify and maximize emerging opportunities.

That’s how it should be. In reality, something else entirely usually occurs. Some banks give change lip-service, and say they’ll adapt but allow things to remain the same. Others allow outside threats from regulators or disruptors to drive their internal changes. When change does occur, it is too often inefficient and ineffective.

Drivers of change

The only way to make sense out of change is to plunge into it, move with it, and join the dance. – Alan Watts

To understand how they should manage change, bank leaders need to know what’s driving the evolution of the industry:

  • Consumers – The emerging dominance of the Millennials will force banks to find new ways to engage this most-diverse group.
  • The rise of digital – Americans’ love affair with all things digital is evolving into a long-term relationship, and changing the way they expect their banks to interact with them.
  • Traditional competition – Marketplace jostling among traditional banks will always occur.
  • Newcomers/disruptors – At the same time, a range of non-traditional financial services providers are bringing new pressure to bear on traditional banks.
  • Regulators – Growing concerns over cybersecurity and privacy will continue to drive new regulations.

What bank leadership teams should be doing

Everyone thinks of changing the world, but no one thinks of changing himself. – Leo Tolstoy

From the board members to C-suite executives and branch-level managers, bank leadership teams must accept that change management is a critical discipline of their jobs. They need to realign their mindset toward accepting that change is unavoidable, and that only through well-thought out direction and dynamic leadership can that change be managed and leveraged to a bank’s benefit.

Once they’ve embraced the concept of change, bank leaders must then take the vital steps to lead their institutions toward efficient, effective transitions, including:

Identify the changes needed. These will be both pro-active changes to maximize emerging opportunities, and reactive to deal with unavoidable changes driven by forces outside of the bank.
Create institutional agility that empowers the bank to react more effectively to short-term fluctuations.
Identify the internal obstacles to change. Resistance to change is inherent in all established systems. Where is the source of resistance in yours? It’s vital to know what — or who — is standing in the way of effective change.
Eliminate those obstacles. An essential task of change management is to remove whatever is standing in the way of intentional, purposeful change. Whether it’s institutional inertia or a handful of employees clinging to how things used to be done, it’s up to leadership to remove these obstacles so that needed change can occur smoothly.
Model how to embrace change. Leadership by example is the most effective form of the art. By demonstrating they understand the value of change, leaders foster a culture of effective change.

Overall, it’s time for banks and credit unions to stop making excuses and start taking disciplined action. When a ship is sinking, a great leader doesn’t just start rearranging chairs, he organizes the rescue effort. Accordingly, success in banking is more than just re-shuffling the way you’ve always done things. Leaders should influence, push, motivate, improve, revise, and innovate. So, what kind of leader are you?

If you change the way you look at things, the things you look at change. – Wayne Dyer

This content is accurate at the time of publication and may not be updated.