Bracing for the Market Shift Ahead
Is your organization ready for the impending market shift?
Typically, when you mention the phrase ‘market shift’ most business leaders think in terms of an ‘abrupt’ event. Prime examples of a sudden market change such as: interest rates changing dramatically, pandemic hitting, or during a stock market crash. Consider this: The word shift is actually defined as, “a slight change in position, direction or tendency.” Nowhere in the definition does it speak to an ‘abrupt, unexpected, or sudden’ event. Subsequently, leadership teams need to change their paradigm about market shifts and begin recognizing that markets are shifting, daily.
The numbers don’t lie. In terms of recent shifts in the banking business some figures to consider. In Q4 2020, there were just over 5,000 FDIC banks--down from 12,500 20 years ago. Today, the top 11 US banks control over 50% of the domestic customers and rising (due to M&A actions since 2008 where they only controlled 15%). If we assume a 200-250 loss rate, by Q3 2025 we would only have 4,000 FDIC banks in the USA. These numbers did not accumulate suddenly or abruptly. It was gradual. Financial services ‘transactions’ have slowly reinvented itself over the last 10 years via financial technology solutions and on-line mobile applications. Its time start re-inventing, aggressively. Bankers, a historically conservative bunch, are now on the brink of extinction due to their own conservatism. Moving forward, innovation is not ‘nice to have’ or something to keep pace with. Wake up! Instead, it is a ‘must do’ in the banking and mortgage sectors. Taking this one step further in Mortgage, study the top 20 mortgage lenders – you’ll quickly realize bank mortgage teams are out-performed by independent mortgage bankers due to their innovation led strategies.
Recognizing these strategic gaps are commonplace in financial services and banking organizations, BlackFin Group routinely facilitates committees, think tanks, consults, and publishes white papers on banking and mortgage innovation. But for those firms who prefer to go it alone, we have designed the self-help continuous improvement model that firms can adopt – the BlackFinCI. Our model highlights the critical components to ensuring continuous improvement of your organization. The models ensure you are leading market shifts, not falling victim. Highlighted below are highlights of the BlackFinCI model.
Strategy: Leadership teams need to continually analyze market trends, customer demands, and their competitors. Meeting regularly to discuss, not simply meeting casually. Collectively, teams need to anticipate the growing market shifts, analyze, survey internal and external parties, and then brainstorm with the broader leadership team the ‘what if’ scenarios. Next, the team decides and then executes. CEO’s might be surprised to hear the ideas from their chief lieutenants given their close proximity to the customer. Lastly, and most importantly, seek outside council from firms like a BlackFin Group (fixed rate project pricing, get-in-get out approach, transparent consulting services) who are continuously analyzing the banking and mortgage business landscape, designing models and strategies, then implementing these solutions that give firms the competitive advantage.
Process: Assign someone who is solely responsible for continuous process improvement. Give them quarterly MBO’s (Management By Objectives) that ensures continuous improvement methods and strategies are implemented. Someone who connects well with sales and operations that will analyze the delivery process, define optimization strategies, interviews consumers, can research and analyze new market offerings, and make sound recommendations accordingly.
Technology: No longer can IT be viewed as a ‘traditional business support’ function. The most successful firms in today’s banking and mortgage marketplace are those who are thinking purely as technologists in relation to the customer experience demands and wants. Look at the top 20 banks or mortgage firms and you will quickly understand the firms focused on technology and customer experience are outperforming firms stuck in the past. The technology requirements of today’s overall society and today’s technology savvy consumer are now driving the required delivery strategy. CIO and CTO’s must be recognized as equals in providing critical thought leadership, playing a key part in designing your organization overall business strategy.
People: People are the most important assets of any organization. Your people not only represent and promote the brand through client services but are the most valuable resources to helping guide the organization through ongoing market shifts. When you cross- train staff, you help teach them how to think more organizationally, from end-to-end. Consequently, they will bring more valuable ideas to help reduce the impact of market shifts. Challenge your staff by providing them business scenarios and asking for their help to solve. These exercises don’t need to be reserved for future leadership training classes, give your people a forum to communicate what your business is doing vs. what they are personally doing to complete banking, mortgage, or investment transactions – are your people telling you that your firms business traditions are dead?
BlackFinCI requires a global systematic approach to be most effective. Applying the BlackFinCI model to your firm’s business plan will immediately position your organization for continued revenue growth, continued innovation, market share expansion, reduction of operating costs, customer retention, and ensure continuous market relevance. Do not forget, if you need help on the design, implementation, and execution of the framework – ask for help. There are plenty of ‘good’ and ‘trusted’ consulting firms with integrity out there – not all of us will ask for your watch, to tell you the time…
The markets will continue to shift ever so gradually – not radically. Your firm’s survival will depend on how tuned in your organization is to the marketplace, and how well you can respond to these constant changes. The choice is clear, either be the change, or be the victim of change.