“Do you care to know why I’m in this chair with all of you? Why I earn the big bucks? I’m here for one reason and one reason alone. I’m here to guess what the music might do in a week, a month, a year from now. That’s it. Nothing more.” This is Jeremy Irons describing the role of CEO of a major financial services firm in the movie Margin Call.
Beyond guiding companies to success, leaders are barraged on a day-to-day basis with an increasing amount of data and must be able to monitor this. Is the company capable of meeting new regulatory requirements? How has the companies sustainable finance strategy evolved? What technologies should be onboarded to meet evolving client demand? Is the company well protected against cyber risks? These are only a few of the questions that financial firm leaders face daily.
Long-termism is clearly critical for financial services CEOs, however defining strategy is no longer the be-all and end-all. The pace of change in the world and technological innovation now dictates that they make choices in real time and adapt course rapidly should the wind change. However, not all leaders seem to be aware of this yet. According to a KPMG study, only 22% of leaders within financial services said they were convinced their role and business had changed in this regard.
You must be able to reinvent yourself every day, adjust or even reinvent the way you operate and manage your business.
“Forget about the five-year strategic plan,” says Anders La Cour, CEO of Banking Circle. According to La Cour, you must remain agile and adjust the direction you take as soon as necessary to ensure that you are successful in the medium- to long-term. “You must be able to reinvent yourself every day, adjust or even reinvent the way you operate and manage your business,” highlights La Cour.
It’s also no longer simply about management skills. Faced with a new generation of talent, the hierarchical pyramid is also being reassessed. Traditional managers are gradually leaving the field to leaders who, in addition to the new hard skills required by their responsibilities, all need to prove their soft skills. Heinrich Baer, Country Head of UBS Luxembourg, is convinced of this, noting that “the combination of both technical and soft skills is crucial for future and current leaders.”
According to a recent study by Harvard Business Review analysing 5,000 job offers, soft or social skills are predominantly required in larger companies with complex structures and in which productivity depends on effective communication. Notably as disparate functions increasingly need a leader to ensure efficient communication lines between departments.
This doesn’t mean that alternative skills are undervalued. In LFF’s recent publication, “Future Skills and Jobs in Finance”, it was found that most C-level positions require international expertise as well as an understanding of new technologies. Positions just below C-Suite need advanced knowledge of mathematics, statistics, and quantitative analysis.
Leaders must have a multidisciplinary view and master the impact of technology; they can’t ignore potential innovation and risk missing opportunities.
Technological innovation and time pressure
The speed of technological innovation has put pressure on leaders within large financial services firms. A McKinsey study highlighted that the use of AI-based tools by financial firms almost doubled between 2018 and 2021, while use of data analysis tools more than doubled. Financial services leaders can no longer leave these aspects to IT departments but must take an interest in the digitalisation of their company. Head of the Luxembourg Blockchain Lab, an initiative aimed at developing the blockchain ecosystem in Luxembourg, Emilie Allaert emphasises this noting that “leaders must have a multidisciplinary view and master the impact of technology; they can’t ignore potential innovation and risk missing opportunities.”
We also have to interact with different stakeholders: clients, staff, regulators, shareholders and society. Given the evolving behaviour of these stakeholders, the leadership function has to evolve accordingly.
Time has also become a critical factor. “The speed at which you execute and deploy new software, develop new products and bring them to market is a much bigger factor than it has been historically,” says La Cour. Financial services leaders are also faced with various operational constraints, such as new regulations and tax rules, as well as external events including economic and geopolitical upheaval. All of which are time sensitive for company strategy.
“The relationship between time and the mass of information leaders must manage has evolved over time. In one generation, we’ve gone from a pure management function to one which is connected in real-time,” notes Catherine Pogorzelski, Country Managing Partner of DLA Piper Luxembourg. This changes the CEO function significantly according to Pogorzelski.
“We also have to interact with different stakeholders: clients, staff, regulators, shareholders and society. Given the evolving behaviour of these stakeholders, the leadership function has to evolve accordingly,” concedes Baer.
Profitability is no longer the sole focus. A 2.0 CEO must take into account employee interests and the community in which they operate, gender equality, carbon footprint and environmental impact, and a variety of other key aspects such as those mentioned above that guide their short-, medium-, and long-term strategies.
The relationship between time and the mass of information leaders must manage has evolved over time. In one generation, we’ve gone from a pure management function to one which is connected in real-time.