As millennials begin to reach C-suite positions, they bring with them new eyes, new skills and new outlooks. In particular, they understand technology, the internet and the digital world.
Does this mean that banks are inevitably bound to evolve? It is not a given.
What is clear is that the next generation of leaders will have a different view. What is less clear is whether they will be able to escape the shackles of the past. This has been the challenge for all their predecessors. Will millennials be able to make that change?
There are two challenges that need to be overcome. The first is that organisations tend to hire people like them. The people who are able to climb to the top of the tree are similar to their predecessors, as their predecessors must like them to offer them promotion. So how does one make it to the top?
If you are a little radical, a little different, a little more challenging, you will most likely be ejected from the organisation. (I should know, as it has happened to me a few times in the past.) Organisations want “yes people”, not people who challenge the system or their viewpoint.
This first truism means that the new C-suite will continue to be dominated by attitudes that existed in the old C-suite. There may be a few executives who demand change, but they must do it in a political way that fits with the cultural framework of the organisation.
Now let us imagine that someone has risen to the highest level, understands the politics, believes they can change the organisation and has the right thinking. Here is where we face the second challenge: how to instigate change?
After an organisation has, over decades, layered technology structure over technology structure, how does one completely reconstruct the backbone of its digital foundations while keeping the organisation alive and running seamlessly?
Overcoming that legacy challenge requires more than just being younger and a visionary
For me, the second challenge is far greater than the first. Sure, the new executives may be far more tech savvy than their predecessors, but that is not enough. It is how well the new executives understand change and, specifically, understand how to change an organisation that has been cemented in legacy structures.
Breaking apart legacy structures is hard. A close example could be repairing a dilapidated hotel. A hotel that has rattling pipes, leaking ceilings, sparking electrics, and holes in its walls. Of course, one can upgrade the hotel, fix the pipes, repair the ceilings, change the electrics and plaster the walls. But how does one do that while keeping the hotel’s residents happy?
It reminds me of something frequently discussed these days: the so-called “Bankenstein’s monster”. This is a bank whose structure has been gradually built on over the past 100 years, but whose core systems have never been replaced. Those systems are now all but dead, purely kept alive through middle- and front-end technology layers that disguise their great age.
Overcoming that legacy challenge requires more than just being younger and a visionary. It is the challenge of transformation and change. This is what we refer to in the digital transformation journey. It is more than just a technology challenge. It is a people challenge.
I often say that digital transformation has nothing to do with technology – it is all about culture and mindset. One must ask how far the importance of digital extends across the organisation, and how urgent is the commitment of the people in the organisation to carry out change.
As is evident, none of this is simple and it has little to do with demographics. It has far more to do with senior leadership’s ability and willingness to fundamentally change the bank.
