HOT ON THE STREET
Change takes center stage
What’s Happening in the Market?
At first, news out this week about Deutsche Bank being reprimanded by the New York Fed for ‘serious financial reporting problems’ seemed like just that – reporting problems – but when you look more closely, the story unravels to expose what the Fed calls a “systemic breakdown”. And it’s not just DB. Banks up and down Wall Street are struggling to stay ahead of the rolling boulder of regulatory change and change is hard. Why are ‘reporting’ numbers essential to get right? Because if you don’t have them right, regulators can’t evaluate your operations and investors feel like they cannot correctly determine your value; two key needs for banks.
It’s important to keep in mind that the ‘low quality, inaccurate, and unreliable’ reporting numbers the Fed is complaining about are the product of the inter-workings of the entire bank. Understanding and reporting every aspect of your bank on a real-time basis is not an easy task and regulators are calling for ‘wide-range remedial action’ and reporting ‘no progress’ for change programs at some banks. Hitting emerging regulatory mandates is a tremendous undertaking for banks and despite huge sums of money and a sea of man hours, banks are still wrestling change. New industry demands require banks to rework and rethink traditional and accepted cultures, structures and processes and re-haul technology at a depth never experienced before.
How is the market reacting?
The amount of change our nation’s banks have had to absorb in a relatively short amount of time has been like drinking from a fire hose. And if regulatory change demands weren’t enough, the onslaught of new consumer demands and digital competitors will continue to push banks to transform for the foreseeable future. This degree and scale of change, note the regulators, can ‘pose significant operational’ risks to banks if not handled correctly. Managing change has never been more important for banks. DB alone is posed to spend $1.35 billion and involve 1300 people in their change journey so they, like all banks, need to get it right. A change program that is lean, directed and driven by change professionals could help banks turn costs into revenues but the strategy has to be complete and far-reaching. It is essential now for banks to look at change as an issue of utmost importance for the senior management of their bank.
Capco's innovative solution for banks caught between shrinking industry revenues and mounting needs for articulated change programs is changeSourcing. changeSourcing adopts expensive change teams and incorporates them into a new organization that teaches and rewards change professionals.
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