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What Does a “Digital Culture” Mean for CIBs?

“Corporate culture” refers to the beliefs and norms that determine how a company’s employees and management behave when conducting business interactions and transactions. Often, corporate culture is implied rather than formally defined, and develops organically over time with and from the people hired by the firm. Prosaically, a company’s culture is nothing but the sum of how clients are looked after, how staff behave and communicate with each other and with customers, how people dress, which hours they work, and every other little aspect of the business operations…
In short, a firm’s culture can be defined as “the way we do things here”. In a digitalised environment, this definition must often be rewritten across the entire organisation.
By Frederic Ponzo

Banks in general, and investment banks in particular, can look like rather peculiar microcosms, with their habits, their codes and their unique personality archetypes. Even the global financial crisis, and its aftermath of collapses, nationalisations, consolidations, forced contrition and regulatory reformation, did not manage to truly alter those. The digital area, however, is unlikely to be as forgiving when it comes to implementing real cultural change.

First and foremost, a concise and clear message is required from the top-down, but even this provides few guarantees that the behaviours will be truly altered. As the new ‘digital first’ mantra rearranges the power and decision-making structures, institutional inertia always kicks as to preserve the status quo.

The key questions therefore become: “Where should be the starting point?” and “How can management enable such a transition?”. GreySpark Partners believe that change is enacted if the following four different dimensions are tackled in order:

  1. Vision & Strategy – The modern investment bank must have a clear strategy, for now and for the future. All employees within the firm should not only understand this vision, but they also must be able to articulate it to clients, colleagues, providers and business partners.
  2. People & Organisation – The organisational structure must be devised in a way that promotes and rewards digitisation initiatives throughout the bank. Culture change is a collaborative process requiring cross-function and product governance across employees and staff.
  3. Process & Behaviours – Values and principles are of little impact unless they are enshrined in a company’s practices. Good behaviours, to be promoted, and bad ones, to be avoided, must be clearly mapped in front of each of the company’s stated objectives.
  4. Ecosystems & Partnerships – One of the greatest challenges faced today by the CIBs is how to interact with each other and in concert with their suppliers. Having lost, over the past decade, a substantial part of the economies of scale as well as the asymmetries in client/supplier relationships that they used to enjoy, investment banks no longer sit at the top of the “food chain”, but instead form part of a diverse and interdependent ecosystem. 

Helping the people change, instead of changing the people

The importance of corporate culture can easily be dismissed as intangible or “woolly”. However, if the behaviours and ethos of businesses and individuals alike do not evolve in accordance to the environment and paradigms that a firm operates in, then there is only one option left for the next generation of management: change the people if you cannot make them change. Somebody once told me that Investment Banking was one of the easiest industry to transform: “to change a bank’s business model, you only need a lift to send some people out and bring new people in…” The extended to which digitalisation is embraced will determine which floor the lift stops.

Next week, we will be looking into what ‘digital manufacturing’ means for CIBs.

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