The following is by Chris Zingo, managing director, Americas, enterprise markets at Finastra.
When Silicon Valley’s “move fast and break things” philosophy and the risk-averse, highly regulated world of Wall Street collide, what makes a good leader in financial services becomes harder to define. Historically, those who ascended the ranks of their organizations did so with the help of tenure and domain expertise. But today, the dizzying pace of technological and cultural change reshaping the financial services industry calls for a new breed of leader.
Global VC-backed investment in fintech reached a record-high $16.6 billion in 2017, and while rapid advancements in areas like cybersecurity, cloud, regtech, AI and machine learning, digital markets and SaaS-based business applications are transforming the industry for the better, they have also created an added challenge for leaders: guiding their organizations in the face of constant change.
Effective leadership in the Fourth Industrial Revolution
Even for the defining leaders of our generation, mastering each new technology with the potential to impact their business or industry would be nearly impossible. So while technical expertise remains an important hard skill for leaders in financial services, in today’s agile-delivery world, possessing the appropriate soft skills will be the mark between success and failure.
Research cited in Harvard Business Review suggested that “in an AI age characterized by intense disruption and rapid, ambiguous change, we need to rethink the essence of effective leadership. Certain qualities, such as deep domain expertise, decisiveness, authority, and short-term task focus, are losing their cachet, while others, such as humility, adaptability, vision, and constant engagement, are likely to play a key role in more-agile types of leadership.”
Although assigning a greater weight to soft leadership skills might be a hard pill to swallow for an industry rooted in analytical, evidence-based decisions, traditional financial firms and new digital entrants alike need to embrace this new reality when it comes to talent.
Grooming the next generation of financial leaders
As the lines between digital and physical blur, and traditional business and revenue models evolve, the skill sets that financial firms seek to attract has changed. We have seen this take root in the highly specialized recruitment efforts by financial services firms to bring on talent in areas like R&D, specialized sales and marketing, product management, and engineering. But as technology is no longer a self-contained industry, and rather a pervasive force that is driving the war for talent in almost every business sector, financial firms need to create workplace cultures that attract, stimulate and retain future leaders.
An Accenture study evaluating the internal culture gap at large U.S. firms found that, “leaders at large companies are often unaware, for example, that lower-level employees might be dissatisfied with internal bureaucracies or lack of entrepreneurial spirit.”
The financial industry today is faced with no small feat of redefining what good leadership looks like, while also trying to reconfigure the makeup of talent in their organizations from the ground up. While this cultural transformation is an undeniable challenge, it is critical to the development of more agile, resilient and innovative financial organizations that will continue to evolve alongside their customers.
