Analytical Diaries

When talking to functional experts in any bank today often the “we vs. them” theme seems very dominant. Whether it’s Finance vs. Risk or Sales vs. Operations a reporting framework crossing all of these functional boundaries seems to be the exception, not the norm. Yet we have conquered far more complex integration challenges from production planning through supply chain management to integrated marketing management. Why are the functional boundaries within the financial services so much more robust than those in other industries? We’ll have a go at explaining this symptom:

• Regulation rally – the volume and speed of regulatory change has kept many CFO functions in a requirements stranglehold for the past 3-4 years. Basel I to III, Sarbanes-Oaxley, MiFID I and II and many more just to name a few have left little room for introspection and looking beyond the brim of ones own responsibilities. But still there are a few firms that have been able to comply with the regulatory avalanche and still create an integrated view.
• Growth greed – many Financial Services have exchanged speedy growth for sustainable growth and profitability. So often the divers functions are measured by similar objectives overstating asset growth KPIs compared to dedicated functional goals fit for distinct subject matter experts.
• Innovation envy – focused on the corporate strategy and called to hone the intrapreneur in every role almost every function has become responsible to progress the big picture, to add his bit to the bottom line. And such it happens, that every idea, every innovation is claimed by all parties involved in bringing it to life.

But does this imply, that the integrated view is not achievable or even advisable any more? Far from it – even in such competitive or rather self-centered of environments having one integrated and single source of truth can make the difference between survival and success. The start of this integrated path however, starts with a strategic and top-down view on how and by which measures the bank should be lead by. Performance management is at last a business cultural call way before it starts to become a technology issue.