Looking back over the past few years, what would you say have been the most significant changes in the industry?
Stefan Dierckx (SD): Well, obviously, the industry experienced massive issues post 9/11, with a real crisis hitting in 2008. And – as a result of these two periods of crisis – many other changes have hit the industry since. More regulation. Greater levels of compliance. More transparency. More data. More complexity inherent in IT systems. But also, increased levels of sophistication from consumer and corporates demanding more for their money, thus more pressure to innovate. More competition – from within the industry as well as outside the industry. More pressure to deliver shareholder value. The majority of banks are far away and struggling to generate the levels of profitability they once did pre-crisis. They don’t have access to the same levels of capital – or at least, the cost of capital is not what it used to be. So the fundamental question has to be…how do banks deliver more or even in some cases the same, with less?
Would you say that the changes you mentioned just now are only the tip of the iceberg, and that the pace of change will only increase?
SD: Let’s face it, the pace of change in many – in fact any – industry today is faster than it has ever been before. Banking as a sector is by no means immune to these changes. The fact that the industry is being confronted by challenges from new entrants from areas that would never previously have been thought of means that banks have to be ever more creative and agile in the way they respond to new challenges, at the same time, delivering on the fundamentals of business. Industry connectivity, volumes of data, access to data, use of data, all of these have fundamental and far reaching implications on the ways banks do business. The next big thing is just around the corner, and you can be sure it will come from a place where it’s least expected!
What’s the biggest source of competition in the industry today?
SD: New entrants pose a significant threat to incumbents, clearly. FinTech. Firms are popping up here and there that are hiving off parts of the value chain and focusing on those areas and those areas only. Doing one thing, doing it well, efficiently, cost effectively – then scaling up to take market share from the establishment.
Do you recognise a war for talent? Even after the extensive cost cutting and headcount reductions many of the major institutions have made in recent years?
SD: Surprisingly – or perhaps unsurprisingly in fact – there is a shortage of talent in the industry. There’s a real need for people who don’t just pay lip service to what they think the issues are, but for those that have a genuine understanding of the detailed workings of the client’s operations. Lots of folks will claim to have been there and got the T-shirt, but unless you’ve lived, breathed and worked in the industry you don’t really talk the same language as the client. We’re lucky – pretty much every person we hire has extensive industry experience in one way shape or form, and they come to consulting because they value the opportunity to share an objective, outside-in view with clients to drive better levels of performance. They also understand that the traditional consulting model is coming to an end – it’s broken. We believe that to truly successfully help our clients to succeed and transform to a sustainable future model, we need to bring more to the table. That’s why we established our own ecosystem that consists of the ability to invest into smart tech (both Private Equity and Venture Capital), to technically enable digital (e.g. The Glue enables Open APIs and new digital products), and to establish true innovation (e.g. The Bridge providing technology-led business innovation and incubation) next to ::projective – delivering innovation and change.
What are the biggest opportunities you see in the industry today?
SD: Sharing. It’s a word that hasn’t historically been used in the industry – firms have been very defensive and protective about their own IP, their operations, the way do things. It’s always been their way. But let’s face it – there are lots of processes that really don’t differentiate the way a bank functions, so the banks would be better off giving the running of these to a third party who will run them just as well at lower cost. Freeing up time, money and resources to concentrate on something that really is differentiating. The industry has made a start but it’s really just putting its toe in the water. There’s plenty more to go for… . Clients need a partner who can provide not just advice, but advice that can be executed against; someone who can facilitate and challenge their approach to innovation; and someone who can act as a conduit to a broader ecosystem of firms, both within and outside the industry.
Does the word regulation still have a tendency to leave a bad taste in the mouth?
SD: Yes and no. Yes, the mention of the word still has a tendency to send shivers down the spines of many banking executives. But at the same time, we need to get beyond seeing regulation as a negative. Addressed positively, it can become a source of considerable competitive advantage. Regulation – like compliance – needs to be seen as an opportunity. Not as yet another box that has to be checked.
Is today’s – and tomorrow’s – consumer more powerful than ever before? Do they really hold all the cards?
SD: I think I’d answer that question in two ways – are consumers today more demanding than ever before? Sure. Particularly the new generation of consumer, who wants instant access, anywhere anytime. Does the new consumer also have greater access to and transparency of the data they themselves own – their personal data – be this spending habits, time spent on Social Media channels, you name it. Yes, yes and yes. So tomorrow’s consumer really does hold more cards than they ever have done.
Will the financial services segment still be attractive to work in?
SD: Is it an interesting industry to work for, as a professional services and change firm – yes, absolutely. Is it attractive as a place to spend time in your career – for sure. Think about it – there are roles, positions, and job titles in financial services that just didn’t exist three to five years ago. The industry is looking increasingly outside for new ways of working, to learn from other walks of life. And we all know that in today’s workplace, the average tenure in any firm is radically different to what it used to be. So financial services can be – and is – a great place to learn, to share, and to truly innovate.
From the outset of his extensive career, Stefan has been involved in a broad range of projects that have covered both banking and finance. His experience has enabled him to specialise in the domains of trade management, clearing, settlement and custody, both from a market infrastructure (CSD’s, ICSD’s, clearinghouses and exchanges) as well as a market participant (Investment banks, brokers, fund managers, etc.) point of view.