Thriving When Conditions are Soft and Sloppy: Financial Institutions Can Learn a Lot from Slalom

I love ski racing. I always have. The objective sounds quite simple, attain the fastest overall time down the hill by making fast turns around gates. A skier’s objective is to keep the tightest line possible throughout the entire course. There are many forces at play that fight against this objective — the course itself, terrain, snow conditions, weather, and sheer speed.

Never mind the unforgiving nature of ski racing in which races are won or lost by mere hundredths of a second. Let’s look at just one of these variables – weather. It can fluctuate very quickly, with snow, fog or high wind for some racers, yet calm and clear for others. But, overall, on any given race day, tough conditions are tough for everyone. Athletes who will thrive must have the ability to adapt to changing conditions.

Similarly, financial institutions must be able to thrive in the face of rapidly changing conditions — Zero Interest Rate Policy, Quantitative Easing, CFPB, Efficiency Ratio, Return on Equity, Volcker Rule, FATCA, BASEL III, Ring Fencing — the list goes on and on. So, what is a bank to do? They must be able to adapt, to transform, and to embrace the changing conditions. Which is much easier said than done.

Banks need to cut costs while improving customer satisfaction, while reacting to excess regulation and while increasing revenue. The goal cannot be to simply survive, but to thrive. In order to achieve this, transformation has to reach across all organizationally imposed hierarchies — and then reinvent business processes on a scale never contemplated. But not just to reinvent — also to innovate. By fusing analytics into process, each customer interaction gets tailored to their needs. And each process is specialized to the specific customer or situation.

Is this a high-risk bet? Interestingly, the typical large bank has about 900 processes. Of these, the top 30 drive 50% of the cost. So an agile, incremental rollout can show faster results with lower risk.

From my years of ski racing, I have learned that it's not the conditions that determine who gets the best time (again, everyone must face the same conditions and the same changing landscape). Rather, what matters is how each athlete interprets and responds to them, ultimately taking the fastest line with the least risk.

 




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