Oracle Industry Solutions—Financial Services

Agile Operations: Creating Tomorrow’s Business Today

A guide to empowering business transformation through greater cooperation between finance and HR.

Forging ahead or falling behind?

Organisations can’t afford to hold off digital transformation any longer. It should be happening now. And if it isn’t, you may already be falling behind.

The financial services industry has realised that a cultural shift is under way. According to the Roubini/ThoughtLab Wealth and Asset Management 2022: The Path to Digital Leadership report, 96 percent of CEOs view digital transformation as central to their businesses, versus 76 percent just a year ago. Increasingly, consumers want access to more services, and demand superior experiences. These growing expectations are driving technological adoption across the financial services industry.

Becoming operationally agile.

Digital-first financial institutions can adopt and develop agile operations—allowing them to increase operational efficiency, attract and retain the best talent, identify new revenue models, and foster a culture of innovation.

In this digibook, we explore what it means to become an agile organisation, and discuss how agile finance leaders can drive adoption of new delivery models. We’ll explore the changing role of CFOs and CHROs, and examine how a culture of collaboration can help attract the agile workforce required for profitable growth.

“Wealth and Asset Management 2022: The Path to Digital Leadership,” Roubini ThoughtLab
Icon with different devices

1. Transformation Trends

The times they are a-changing.

The financial services industry is ripe for disruption. Banks, asset management, and insurance are no longer merely competing with one another—now, they must also contend with cloud-native startups built on groundbreaking technologies. Blockchain-enabled cryptocurrencies have rocked traditional institutions to their core, demanding new organisational models and enabling new value-added services. And at the back of every CFO’s mind is the knowledge that an Amazon, an Alibaba, or another leading disruptor may be on the verge of creating a platform to make traditional banking obsolete.

Transformation Trends

But if the industry is prone to disruption, then traditional players are particularly susceptible. Their profits are being eroded, and they’re struggling to deliver the experiences consumers demand. Cumbersome legacy IT stands in the way of innovation, while new, increasingly strict regulations mean compliance is an ongoing battle.

  • HSBC suffered a 62 percent profit drop for 2016
  • European private banks experienced a 10 percent profit fall in 2016
  • Japan’s megabanks have suffered four straight combined profit falls
IT Icon
Richard Fairbank, chairman and CEO, Capital One
IT Icon

Your big opportunity.

But digital transformation represents an opportunity for the financial services industry, too. Consider these statistics on the benefits of digital adoption:

Firms that have already reached an advanced digital stage report an 8.6 percent increase in revenue, an 11.3 percent rise in productivity, and a 6.3 percent improvement in market share. Those that move too slowly stand to lose 79 million USD per billion dollars of revenue a year. “Wealth and Asset Management 2022: The Path to Digital Leadership,” Roubini ThoughtLab

Revenue vs. cost of going digital.

Chart Icon

That stat on productivity is particularly revealing, and highlights how digitalisation is being used to empower the workforce.

2. The Innovation Shortfall

Levelling the playing field.

In many ways, fintechs have the upper hand over banks. Many are cloud-native, and are built on the agile business platforms banks must work so hard to adopt. Fintechs are less regulated than banks, and are therefore free to innovate and rapidly deliver new product and service offerings. They’re geared toward creating the flexible, mobile experiences consumers crave, and aren’t held back by legacy IT. Many possess as standard the kind of innovative, collaborative workplace cultures so prized by digital workers. But fintechs have their own challenges, too—aligning innovation with ever-stricter regulations is a constant struggle, while scaling from startup size to sometimes global proportions is a significant hurdle.

But for traditional financial institutions, developing operational agility is crucial in making up the innovation shortfall.

IT Icons

Competitors coming out of the woodwork.

To make matters worse, technology has torn down the cost barriers for disruptive new players to a near-zero entry fee. At a time when banks are still struggling with their cost-to-income ratio, global capital is flowing into fintech. Consumers are ready and willing to bank in different ways, and fintech has the agility to identify opportunities and develop products and services to fill the gaps in banks’ offerings.

To compete and stay relevant, banks must move to emulate the agile business models favoured by fintechs. More, CFOs must balance agility with efficiency—blending cost and risk management with growth, collaboration, and innovation.

One thing is clear: Internet-enabled business models and disruptive technologies will continue to radically alter the basis of competition. “Agile Finance Revealed: The New Operating Model for Modern Finance,” AICPA
Connect Icon

Finance Must Rethink Its Mission

And its operating model.

Balancing Efficiency with Agility

3. What’s Agile Finance Like?

Banks and traditional financial institutions must actively pursue change if they are to survive and thrive in this new, heavily regulated business landscape. Traditional institutions are currently often hierarchal, male-dominated, and resistant to change—in stark contrast to fintechs. But what should an agile bank look like? And how do you bring about such fundamental transformation when replacing legacy architecture and processes can seem a Herculean task?

All banks need an organisational structure capable of enabling ongoing agility. These must be less hierarchal in nature, with leadership ready and willing to take an active role in the challenge of transformation. New technologies have a major part to play in disrupting existing organisational models. Technologies like blockchain will broaden banks’ core offerings, while AI and machine learning will revolutionise both the front and back office—bringing automation to the call centre, bank tellers, and more. The agility to adapt to these changes will be crucial.

IT Icons

There has never been a more important time to be in finance, using your data-driven insights and enterprisewide view into operations to guide your organisation through today’s uncertain times.

Safra Catz, chief executive officer, Oracle
Calculate Icon

Success story: HSBC.

Moving to the cloud was essentially part of our new technology strategy. While it started as a program to increase control and transparency around our costs, it’s also enabled us to respond to changes in the regulatory environment. We couldn’t have responded to that regulation as quickly as we’ve been able to do if we’d gone with an on-premises solution.

Joanna Fielding, FCMA, CGMA, and CFO, HSBC Global Services Limited
Cloud Icon

Agile Finance Revealed

The new operating model for modern finance.

Speedometer Icon

Greater Efficiency

Through Relentless Automation

Idea Icon

Better Information

To predict the future

Success Icon

More Influence

To drive business outcomes

The agile bank is tech-enabled. It’s empowered to be more efficient—automating any tasks that don’t add business value. It’s enhanced with superior, AI-driven insights—sifting through third-party and internal system data to augment finance. And it has the influence to support a consolidated data management approach—providing confidence in rapid decision-making across lines of business.

Rethinking C-suite roles.

But the first changes must be made in the boardroom. C-suite roles must evolve and adapt. The traditional, accountancy-focused role of the CFO is becoming increasingly aligned with strategy, growth, and value generation. The CHRO has a crucial role to play, too. According to the MIT Technology Review, "HR must ensure that the business has the talent it needs to execute on digital strategies."

Empowered by cloud and new digital technologies, finance teams must become increasingly agile and cross-functional, empowering business development.

Percentage Icon
increased agility in new product new product releases.

Two-thirds of CEOs want their CFOs to spend more time driving growth—ensuring strategy, budgets, and capital allocation are fully integrated, growth spots are nurtured, and short-term demands are balanced with longer-term success.

“Who Is Better at Strategy: CFOs or CSOs?” Harvard Business Review
Connect Icon

Powered by data.

Traditional finance organisations need richer data, and must adopt advanced analytics to make—and act on—swift, informed decisions. Embedding high levels of automation, artificial intelligence, big data, and analytics within your business processes will allow CFOs, CHROs, and other members of the finance team to concentrate on more forward-leaning activities—like strategy—meaning the entire role of the finance team can shift to focus on enabling and encouraging change. In this way, agile finance leaders are born.

Increasingly, the CFO has a demanding role to play as the corporate strategist or ‘copilot’ to the CEO in ensuring the business adapts for the digital age. These new demands on CFOs and their finance teams are often driving finance to rethink their mission and operating model—and the pace is accelerating.

“Agile Finance Revealed: The New Operating Model for Modern Finance,” AICPA
Stats Icon

No longer flying solo.

Finance has become the copilot to the business, providing the forward-looking guidance management needs to capitalise on the next market opportunity, while HR plays an essential role in ensuring that the business has the talent it needs to execute on digital strategies, and create a change-ready culture.

Together, finance teams and HR can drive business transformation. These agile business leaders are:

  • Strategic
  • Customer-focused
  • Business-aligned
Business Icon
  • Strategic
  • Customer-focused
  • Business-aligned
Business Icon

4. Workforce and Technology

The money and the skills.

C-suite roles aren’t the only things that must change if your digital transformation is to be successful. There are other challenges to overcome. There’s the financial investment to consider, which can be significant. And as we’ve already seen, it can take some time for that initial investment to realise a tangible return. Then there are the skills required to make use of these new technologies. Through combined strategic planning, finance and human resources must become closely aligned—ensuring the right individuals are in place at the right time to get the most from your technology investment.

Business Icon

Respondents view closer finance and HR collaboration in the cloud as a strategic necessity, promoting operational excellence and accelerating innovation.

“Finance and HR: The Cloud’s New Power Partnership,” MIT Technology Review
IT Icon
Percentage Icon
plan to create a shared finance and HR function within a year.

The new digital workforce.

Meanwhile, fintechs are benefiting from the influence of the new digital workforce. Their agile, innovation-first cultures reflect the way digital natives want to work, and that means traditional financial institutions must work hard to attract the best and brightest new talent.

To attract and retain digital natives, financial services must:

  • Work to rebuild corporate trust and brand identity
  • Offer “always-on” learning and career development
  • Provide a modern, innovative, collaborative working environment
  • 40%of millennials would switch to a Google Bank.
  • 60%of institutions believe top talent will want to work for those aligned to their own social values.
  • 72%of financial services CEOs see limited availability of talent as a threat to growth.

Life after crisis.

The deep banking crisis of the last decade has had a profound effect on the financial services industry. Confidence in the industry has been rocked, reputations are at an all-time low, and traditional players must work harder to attract fresh talent. Meanwhile, mergers and acquisitions have become increasingly commonplace—and with them, the challenges of integration, reskilling, and restructuring that inevitably follow. A strong focus on human capital management will create a new culture that effectively engages talent, and rebuilds trust and reputation.

Modernising the workforce.

The financial services industry is changing, and the workforce must change with it. Banks may need to manage a reduction in workforce numbers of 5–20 percent over the next few years, and must optimise efficiency to make up the shortfall. At the same time, they’ll need to compete for the highly sought-after digital-native talent necessary to enable innovation, and effectively reskill their existing workforce to support a modern customer experience. New technologies such as machine learning and analytics are driving a new working experience, enabling personalised learning and development, collaboration, and talent identification to help you attract, develop, and retain the very best talent.

Closer alignment of HR and finance promises greater productivity, greater performance, and more-effective recruitment.

5. A Culture of Collaboration

Leading from the front.

Agile finance leaders are uniquely placed to become agents of change, and support business agility. These individuals can be defined as having developed a broader skill set than traditional finance leaders, and made great strides toward harnessing the potential of cloud and other digital technologies.

Beyond their digital and strategic savvy, these agile finance leaders will develop closer ties to HR—threading the CFO’s influence through the business to ensure decisions are made based on the proper analysis of relevant information, and performance is managed in the interests of stakeholders.

Screen Icon

67 percent of agile finance leader teams spend more than half of their time on forward-looking analysis/insight, versus just 45 percent of others.

“Agile Finance Revealed: The New Operating Model for Modern Finance,” AICPA
Statistic Icon

Agile business, collaborative culture.

The agile business is well placed to encourage a culture of collaboration and innovation—helping refine the product development process, minimise time to market, and adapt existing products and services to deliver superior customer experiences. Further, this cultural shift will also help institutions attract and retain the best talent—those digital natives who are so important for encouraging transformation.

Culture really sets the stage. Our culture creates the conditions for how innovation happens.

Michael Shostak, SVP and CMO, Economical Insurance
Statistic Icon

A home for innovators.

Digital natives are less likely to be attracted to traditional corporate structures, and there are plenty of opportunities for them to find employment elsewhere. Attracting innovative people means understanding what motivates them. They’re aware of what they can do for your institution, but it’s not always clear what your institution can do for them. Understand them, and you can create a workplace culture that will speak to their needs.

Innovators:

  • Thrive in a collaborative atmosphere
  • Need a flexible environment
  • Expect rapid progression
  • Expect constant feedback

Becoming a digital visionary.

Your digital vision must run deep, governing behaviours, interactions, and business practices organisationwide. The whole organisation must live and breathe the customer experience—from internal comms to product development, and from training to office layout—so that this culture of collaboration and innovation can flourish. Adopting a culture that places innovation at the core of your organisation will allow you to compete more effectively with fintechs—both for customers and talent.

Growing your talent investment.

It’s one thing to make promises to attract innovative people. But financial institutions need to keep them—and encourage them to innovate. Talent can be a significant investment, and it’s important to ensure your returns.

6. An Ongoing Mission

Ready or not, your business is either undergoing a period of digital transformation, or will do so imminently. To effect this change—and to become operationally agile—will require far closer integration of finance and HR.

Never standing still.

But even with all of the key components in place—the right culture, technologies, and people—your transformation is not yet complete. You could argue that it will never be complete. Being operationally agile means never standing still. Retaining your skilled workforce will remain an ongoing battle—the risk of recruiting top, digital-native talent is in failing to adequately integrate them into the business. They need to become the lifeblood of your institution, or they’ll quickly move on.

Better in the cloud.

A powerful, platform-based approach to collaborative finance and HR will become the beating heart of your organisational transformation. HR professionals need a system that’s designed for the future of work, and capable of addressing the underlying complexity.

Cloud Icons

The Components of a Complete Financial Services Cloud Platform

CX Cloud

Oracle CX Cloud Suite is an integrated set of applications that span the entire customer lifecycle—from marketing to sales, and commerce to service.

CX Cloud Icon

HCM Cloud

Use a single global human resources solution that aligns common global HR processes, supports local compliance needs across multiple countries, and engages your workforce.

HCM Cloud Icon

ERP Cloud

Streamline your enterprise business processes with Enterprise Resource Planning (ERP) Cloud. With ERP Cloud Financials, Procurement, Project Portfolio Management and more, you can increase productivity, lower costs, improve controls, and bring greater insight to the business.

ERP Cloud Icon

Oracle Risk Management Cloud

Width Oracle Risk Management Cloud, you can confidently manage risk and have systems of control to meet compliance requirements imposed by external bodies: BASEL II and those required internally. It can quickly detect potential process and control issues, and provide line-of-business leaders with strategic risk insights.

Oracle Risk Management Cloud Icon

Big Data and Analytics Cloud

Oracle Analytics Cloud delivers business analytics for traditional data and big data across the entire enterprise.

Big Data and Analytics Cloud Icon