Technology, customer need and the overall business environment all has been undergoing rapid change, so banks and insurance companies need to react fast. However it is not Fintech that will wipe out traditional financial institutions but the lack of transformation of organizational cultures. In the absence of regulatory safety net, these financial institutions would end up like video rental shops.
How come that 9 out of 1o digital transformation projects fail? How come traditional financial institutions are unable to think with the mind of their customers? Why are we afraid to ask questions in meetings or stand up for what we believe in?
We talked with dr. Júlia Füredi about the biggest challenges of the financial sector, organizational culture change and the need for mindset change.
In a nutshell
“If you don’t know what is your organizational culture look like, you will not be able to change it.”
Combining her HR top managerial experience with technology, she has been supporting cultural transformation and building “dream teams” in a London based start-up, People Not Tech.
She believes that the only way to change organizational culture is to first get a deep insight into it.
Agile has become ever so popular, but it does not cure all ailments.
Financial institutions consider their culture a sacred cow that should not be touched or if indeed they do, they attempt a quantum leap without changing the mindset first.
She believes that a psychologically safe environment needs to be set up to channel the internal wisdom of the organization instead of bringing on board outside consultants.
Why has organizational culture become such a hot topic these days?
Dr. Júlia Füredi: We are living in turbulent times. Business environment is undergoing massive changes just as technology and the needs of customers alike. Companies need to respond quickly. Their reaction is their competitive edge.
Why is it so challenging to change the culture of an organization?
Dr. Júlia Füredi: I find that the biggest issue is that people do not know what organizational culture is. Hence it makes it very difficult to change.
Organizational culture is none other than the sum of our behaviour at the workplace. It still makes it hard to tackle, impossible to measure, so we are afraid to touch it.
This is why the gut reaction to these outside changes comes in the form of interior design rearrangements or process re-engineering. We build open offices, litter the floor with colorful bean bags and then we introduce agile. But nobody cares about the basics, whether our mindset and behaviour follow suit.
“It is like the horse in the carousel that has been going around forever. If we took this horse out of the carousel and all of a sudden we expected it to perform in a show jump, chances are it would fail spectacularly. What you would witness was the horse going around and round with its eyes looking down because this is the way it had always been socialized.”
Are banks and insurance companies forced to make a move?
dr. Júlia Füredi: They certainly are, however they will not extinct like dinosaurs if they don’t. Inertia will keep them alive and moving forward for quite a while. And they are very well aware of it too. This is why they seem reluctant to get up and make a move.
In the short run their competitiveness is defined by how much push and support they give their employees with innovative ideas. Instead of mock-hackathons or secluded innovation hubs, they need to look for strategic breakthrough opportunities, innovations that lay the foundation of future business models and processes.
The appearance of Fintech companies within this ecosystem has a huge impact, but banks are still hesitant to engage with them.
Getting to know and responding quickly to their clients is coded in the DNA of Fintech companies.
While banks are more product or regulatory driven, the needs of their customers end up somewhere in the middle of their list of priorities. It is quite disturbing, as let’s face it, we all are customers of banks.
My ideal organizational culture expects me to bring to work my inner customer self every day. When we develop a product or a process, why don’t we ask ourselves: would I be happy with this as a customer? Are we truly happy customers when we need to sign our names on 22 pages at account opening? (The answer is no. We are not.)
“It is almost like we shed our customer-self with our coats in the morning and do our job that our role requires us to do. You go in as yourself but you need to suppress your inner customer in the office.”
This is one of the biggest disadvantages of banks, while at the same time this brings Fintech companies a step ahead – they are closer to their customers as their life depends on them.
When the customer is constantly on the top of our mind, that is a strong indication of a good organizational culture.
Banks could learn a lot from Fintechs, how they operate on a daily basis, how they relate to their employees and what is their view on customer experience. Because it is their livelihood, everyone is allowed to comment and share their opinion, as nobody doubts their intent to do better and get results.
In the meantime Fintechs have a lot to learn from incumbents as well, so they can become more valuable partners to them. What I see now, is that they are living in parallel universes, trying to figure out what to do with one another.
“The most important thing would be to learn from each other, exchange ideas and not to set up isolated incubation labs.”
What’s missing in today’s organizational culture?
Dr. Júlia Füredi: Each and every company should be able to assess the as-is situation and where they are able to go from there.
If getting from A to B requires enormous amount of innovation but
there are no bottom-up initiatives, no learning curves, mistakes are not tolerated, then we are not ready to get to B. These are just a few of those that are needed for successful transformation.
We might be ready one day but our current status needs to be factored in when defining the time horizon.
If the organization is not able to embrace out-of-the-box innovation (eg. because job descriptions are the points of reference), if silos are unbreakable, when communication means escalation, when colleagues do not dare to ask questions not to look stupid, then this company is not ready to introduce a new WOW (way of working).
When petty jealousy kills off new ideas, when top management power plays decide which processes are to be improved, or there is no time to stand still for a moment and reflect on where we are going or whether we should change our course, then we are still in heavy carousel mode.
One of the trademarks of an immature organizational culture is when teams are missing psychological safety. This phenomenon is not a well-known or researched obstacle of efficient teamwork in business organizations.
“If an employee can be him/her true self, only then he/she can grow.”
Organizations need to adapt to their ever-changing environment and it happens through learning. Gaining insights into the ecosystem, themselves, its barriers and its opportunities selfless, real-time information share, curiosity, the drive to learn about the world beyond our desk are all forms of getting familiar with our surroundings.
Sadly however, these qualities are missing from today’s generation of potential managers. Do your job, meet your KPIs, collect your bonus, abandon all else. We are not interested in what is going on in our profession, in our industry, we do not attend conferences -and even if we do, we tend to spend it with eyes on the screen of our company phone, answering urgent emails.
“But we need energy, fire, passion and rebels to drive change!”
Can agile help tackle these problems?
„Two years ago it was turmeric, last year it was vitamin D, this year it is agile that is the miracle cure.”
Dr. Júlia Füredi: No doubt that there are situations in which agile is the right way to go. Especially when we are aware of the as-is and the purpose of use is clear.
However the need for using agile usually comes from the “top” or from the “group” demanding partial or full roll-out asap. Most of the times this is not a need coming from organic evolution from within. Such “transformation needs” present themselves in the form of consultants in shining armour on white horses with sophisticated scripts in their hands.
“Pre-roll-out workshops about ceremonies draw pictures of a happy future, plus a double-digit in economic growth. Who wouldn’t want that?”
What I am missing the most is whether we are aware that this kind of iterative way of working is based on close client contact, sharing mistakes openly, interdependency among team members, individual empowerment and responsibility – many things that have not been part of the past culture.
“This is why it is a must to change our mindset before we adopt new ways of working.”
A colleague who is used to his/her boss making decisions exclusively in the past, will he/she gather the courage to speak up and contradict said boss on a stand up, just because “we have gone agile”? This is exactly that kills off these noble and very expensive efforts -at least 9 out of 1o times.
How does People Not Tech come into the picture?
Dr. Júlia Füredi: What we see is that these transformational ventures to become successful, organizational culture – employee behavior – needs to be assessed and modified.
We believe that there are three formative pillars of that: knowledge, passion and non-gender specific balls. So we developed a software that operates along these two lines:
- It assesses the as-is of organizational culture and shows the gap to the required state. Based on behavioral responses, it provides ample data to be analysed by the company to decide whether it is mature enough to go ahead with its transformation efforts and which gaps to the strategy need to be addressed, modified. The application supports the breakdown of silos and those behaviours that are the basis of transformation.
- The other part of the software forms “dream teams”. Based on answers and behaviors measured, it puts together psychologically safe teams. This way they have the biggest chance to succeed. The algorithm makes a suggestion for the ideal team, then peers can vote for the final composition. The trust and mandate coming from peers drive individual and team results.
The People Not Tech app is useful if teamwork’s is the basic means of delivery and ROI is in direct connection to overall velocity and efficiency or a company would like to assess its culture before rolling-out agile or working on putting together squads.