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What They Don’t Teach You at Banking School


The financial services industry has a long and important tradition of executive education. Up and coming managers are sent off to graduate banking programs to learn industry best practices developed over prior decades, and in some cases, centuries. These programs are well prepared to teach the evolving art and science of asset and liability management, credit underwriting, portfolio management, and general leadership and management principles.



JP Nicols
JP Nicols
However, many programs have not always been so well suited to prepare their students for the revolutionary changes that have been impacting financial services in profound and dramatic ways. I created the world’s first graduate banking school class on fintech and innovation to help address this gap. I first taught the class in 2015 at the Pacific Coast Banking School, held at the University of Washington, where it has become one of the program’s most poplar classes. I have also taught portions of it at many industry seminars and workshops before and since. This year I am looking forward to also joining the esteemed faculties of the Graduate School of Banking at Colorado and the Graduate School of Banking at Wisconsin to help prepare our future leaders.

These are some of the key lessons for students who not only want to master the best practices of the past, but to also learn how to establish the next practices to shape the future of banking.

1) Think Beyond Traditional Competitors

The nature of competition in financial services has changed more in the past 10 years than in the prior 100. It is no longer sufficient to measure your performance relative to your peer group of similar sized and similarly structured financial institutions. Regional and national competitors once relegated as secondary competitors by local knowledge and community ties have bridged those gaps with the rise of broadband, mobility, and apps. The dynamics of competition have been further stretched to include fintech competitors from across the country and around the world, providing new alternatives to every traditional product and service. Leaders must have a much broader view of competition and competitiveness to achieve success in this changing environment.

2) ‘Plan Your Work and Work Your Plan’ Doesn’t Work Anymore

The logical and pragmatic credo of ‘plan your work and work your plan’ resonates with the analytical and risk-averse nature of bankers, and in more predictable times with more homogeneous competitors it generally worked. Today’s leaders can no longer afford to spend several quarters perfecting and vetting plans internally before learning how they actually perform in the market. The answers lie outside the building, and leaders must learn how to adopt and lead a more agile ‘test and learn’ approach to replace opinions with facts more quickly. Just as important, they also have to learn the skills to be able to adjust their course accordingly as the data requires.

3) The Effective Allocation of Limited Resources

Financial capital, human capital, and managerial time and attention are the primary resources leaders have at their disposal to create positive outcomes. Like all resources, these too are limited, and they most be used wisely, and not just for short-term results. Despite their precious rarity and the uncertainty of investing in the unknown, some portion of these limited resources must be allocated toward creating strategic options for the future. As tempting as it is to wait and see, to hold out for some undefined future date where the horizon must surely come into clearer focus, the reality is that the risk only increases the longer you wait to take action. The best way to predict the future is to create it.

4) Collaborating with Internal and External Partners

The financial institutions that are winning today and that are most likely to win in the future look a lot more like technology companies than ever before. Data scientists, programmers, designers, and engineers are among the fasted growing job titles, and leaders need to be know how to manage their skills and their work toward the outcomes that tomorrow’s customers demand. Increasingly, this means leading effective collaboration across internal business units, and even more challenging, with external vendors and partners. This isn’t about the mindless pursuit of cool technology and shiny objects, it’s about leveraging modern tools to find new ways to create value.

5) Leading Change

An organization’s natural state is to maintain the status quo, and human nature prefers routine and familiarity over change and uncertainty. Today’s leaders need adaptive and situational leadership skills to map a course through uncharted territory, and keep the team focused on the goal, even when it might not be so clear from the onset. To focus more on deeply understanding the needs of the customers and orienting the products and services around them rather than just selling what you have.

Like leaders, innovators are made, not born. Tools and frameworks can be taught and practiced, and everyone should have a role in improving existing products and processes beyond simply executing business as usual. This is even more important for leaders, and most organizations cannot afford a full team dedicated to nothing but innovating new solutions.

New technologies such as distributed ledger technologies, artificial intelligence, and machine learning are still in the early stages. We don’t know exactly how it will all play out just yet, but we must help our leaders embrace and lead change to explore the possibilities and manage the risks.

None of these lessons will sound new to anyone who has read or heard me before, but they are still pretty unique for the traditional banking school curriculum. Hopefully they will become less rare as leaders bring these skills back to their job and use them to help develop future leaders inside their organizations.

Our future depends on it.

JP Nicols, CFP®

Internationally recognized as a leading voice for innovation, strategy and leadership for the future of financial services, JP combines 20+ years of experience with a fresh perspective on combining high-tech with hightouch. His work has been featured in some of the industry’s top publications, including American Banker, BAI Banking Strategies and Investment News.

He is the founder and CEO of Clientific, and the co-founder of the Bank Innovators Council.

www.clientific.net
www.bankinnovatorscouncil.org/



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