The most severe economic crisis in living memory has caused unprecedented disruption across the global finance industry. PA Consulting Group’s research, based on interviews with 20 of the most influential financial services leaders in the Netherlands, suggests that the worst may still be to come.
A double-dip recession, and the narrow avoidance of a triple-dip, indicates that the Netherlands is struggling to turn its economy around. Action to prevent a repeat of the global crisis continues, but is hampered by a lack of clarity about what is required to achieve stability and by national and international resistance to stabilising measures. Against this backdrop, business leaders are trying to cope with a shrinking market. The leaders we interviewed told us that winning back the confidence of their clients is vital to achieving growth. However, current efforts are proving ineffective because financial institutions are required to focus on risk management and cost-cutting.
Instead of aiming to simply cope with uncertainty, business leaders should see it as an opportunity to gain market share. By balancing cost reduction with an innovative approach and an entrepreneurial mindset, financial institutions can achieve growth in a shrinking market.
Focusing ruthlessly on results
Most of the leaders we interviewed recognise that their organisation could gain market share by competing on better use of resources. As we have seen through our work managing complex projects across a range of industries, this means breaking down silos and synchronising systems, strategies and people. Regardless of history, investments made or personal interest, you should stop all activities that are risky and that fail to deliver expected results. The financial services industry, which in the past was rarely cost conscious and which is used to doing business with billions, must now look at every penny it spends.
Acting now to develop new products and services
It is right to continue to focus on regaining clients’ trust, but organisations should not wait for the sector to regain confidence before developing new products. You should start with your own client portfolio, defining needs and acting immediately to meet these needs. A new approach will require new channels and better service, which you can develop by drawing on the insight contained in the big data your organisation holds about clients. We have found new cloud-based services, such as Google’s Big Query tool, allows you to analyse such massive sets of data cheaply and quickly. You will also need to adopt more radical strategies, including exploring different business models/markets and challenging traditional assumptions about normal growth and achievable profit targets.
Fostering entrepreneurship at every level
As new regulation is gradually introduced, your organisation’s resources and attention will become increasingly focused on compliance, reducing the time available for creating original solutions that will gain market share. You can counter this trend by focusing on developing entrepreneurship at every level of the organisation, something that is, according to many of our interviewees, currently missing in many businesses. Our work in this area suggests that achieving this requires developing an effective HR function which acts as a strategic business partner rather than an administrative function.
Whether helping an institutional asset management company gain market share through top-line growth, or helping a retail bank achieve greater agility to face the ever-changing market, we have been working with financial institutions in the Netherlands for over 25 years.
To find out more about achieving growth in a shrinking financial services market, contact us now.