Financial leaders brace for change to address multiple threats as they face significant gaps in organisational preparedness for successful business transformation, a recent Mayer Brown study has found.
“The Next Organization: Seven Dimensions of Successful Business Transformation (A Financial Services Report), which includes insights from 197 leaders from financial services firms, revealed that nearly two-thirds of business leaders (64%) believe there is a need for complete organisational transformation.
Moreover 68% believe the current market environment creates challenges to accomplishing business transformation.
The survey also found that over two-thirds (68%) of financial institution leaders believe that their organisations are not transforming fast enough (compared to 62% of investment firms).
Most financial services firms (86%) stated that they have an overall business transformation strategy in place, yet most do not look beyond 12 months. And , over two-thirds (64% of financial institutions and 69% of investment firms) believe that their organisations need complete transformation to thrive and create value.
Jon Van Gorp, chair of Mayer Brown, said: “As the law firm advising the world’s financial services industry on complex matters—Mayer Brown’s signature strength—we undertook this survey to uncover the multifaceted and sometimes conflicting opportunities and obstacles confronting industry leaders, and to establish benchmarking solutions for achieving business transformation. For instance, ESG compliance and capital sourcing present both opportunities and obstacles, thereby complicating strategy development.”
Mayer Brown identified seven key dimensions that provide a framework for navigating these issues, which can help their clients in their transformation journeys.
“With a clearer understanding of the drivers of transformation, business leaders, in collaboration with their legal teams, are well-positioned to evolve into the ‘Next Organization’,” Van Gorp added.
The dimensions include creative capital, with 80% of financial institutions and 76% of investment firms believing that innovative financing solutions (including an increase in private sector credit) will power growth.
A high percentage (84%) of investment firm leaders say that geopolitical agility will be critical for an organisation’s expansion internationally in the future, and nearly 80% of financial services organisations believe companies must take a new, more proactive, approach to risk management to pre-empt crises.
Additionally, over 70% of financial services organisations highlighted regulatory anticipation and being able to adapt quickly to developments as crucial to transformation success. 77% of investment firms and 69% of financial institutions believe a strong sustainability focus is needed to thrive in the next economy.
Regarding technology, 77% of investment firms and 69% of financial institutions believe that their organisation must demonstrate resilience against increasing cyberattacks and keeping ahead of AI developments.
Finally, nearly 80% of financial services organisations believe visionary leadership will enable companies to grow and outpace competitors in the next economy.
According to the report, there are a number of macro forces, such as stakeholder activism or geopolitical turbulence, that could drive corporate progress between now and 2026.
Over 60% of both financial institutions and investment firms said the end of cheap money is encouraging a pivot towards cheap capital; and 68% of them believe that increasing stakeholder activism will encourage positive change by improving corporate accountability.
investment firms (66%) and financial institutions (67%) believe that the unpredictable regulatory environment will drive business forwards; and 68% of financial institutions and 71% of investment firms say geopolitical turbulence will encourage new ways of business.
Additionally, 83% of leaders cited M&A as the way to advance AI capabilities.
