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Financial Institutions Set For Change

Change management is defined as the methods and manners in which a company describes and implements change within both its internal and external processes.

The primary role of a traditional bank providing financing and capital is set to be challenged further in a post COVID-19 world by non-banks, which predicts that alternative providers of capital are set to become an even more important part of the global financial system.

In the last 10 years, aggregate lending in USD by non-banks has outstripped the pace of growth of traditional lenders, with non-banks seeing a compound annual growth rate of lending of 2.3%, compared to 0.6% CAGR for banks.

This trend is likely to accelerate as declining core capital ratios – caused by asset impairments resulting from the COVID-19 pandemic – will limit the lending capacity of banks, particularly in Europe.

Non-traditional sources of finance such as private equity, sovereign wealth funds, credit funds and governments themselves will need to step into the breach to finance the recovery and its aftermath.

In 2019, non-banks – including private equity funds and sovereign wealth funds – lent 41 trillion dollars compared to the 38 trillion dollars lent by traditional lenders.

In particular, the analysis shows that private debt has seen substantial growth, which is set to propel the asset class into a significant category of non-bank lending. Since 2010, private debt has been growing with 11% CGAR.

For insurers and asset and wealth managers, the challenges are equally daunting.

The report argues that a combination of near zero interest rates and the rise of digital-only players will create tighter margins across product portfolios, thereby emphasising the need to digitise rapidly, gain cost efficiencies and register real gains in productivity.

All of this will have to be completed as governments mandate more spending and reporting on ESG initiatives.

Those that fail to do so are likely to be caught in the wrong end of the coming wave of deals and restructuring.

Post-Pandemic Changes Are Permanent

As the world resurfaces post-pandemic we wanted to discuss the crisis that has affected so many lives and livelihoods, we’re bringing you a look at how it has affected business and society.

The need for business leaders and policy makers to fundamentally rethink the way they plan, invest and operate in the future is underlined in a new survey of 699 global Chief Executives.

The survey shows the majority of Chief Executives believe that COVID-19 pandemic driven shifts towards remote collaboration, automation and fewer people working from offices, are here to stay. Overall, 61% say their business model will be more digital in the future – a change accelerated by the pandemic.

Responses show digital infrastructure, flexible working and employee well-being will top their boardroom agendas as they reconfigure business operations to secure growth in the next 12 months and beyond.

Fifty-eight percent of Chief Executives say ensuring supply chain safety will remain a focus, driving technology investments to enable tracking of products from production to delivery, and to ensure their suppliers and partners are resilient during crises.

In a challenge to decades of increased globalisation, almost two in five of Chief Executives believe there will be a permanent shift towards onshoring and insourcing, and a similar share expect an enduring increase in nationalism.

Chief Executives are naturally cautious on their own revenue growth prospects in the year ahead. 65% are predicting a decline in global growth. Concern about the global economy is highest in Africa, Central & Eastern Europe, Asia and Latin America.

Business leaders also believe the pandemic increased the importance of responding to a wider range of stakeholder issues, particularly employees. Employee support measures included health and safety, well-being and financial support.

Forty-two percent made contributions to community organisations and almost a third of business leaders reduced their own pay. Those Chief Executives who maximised retention and protected employee health and safety believe it will have a positive impact on their organisation’s long-term reputation.

The changes driven by COVID-19 add significantly to an already full agenda for Chief Executives. Climate change remains an influential trend for consumers and businesses alike.

When asked if the shift to climate change mitigation would endure, the majority of business leaders said it would. Business leaders believe short term increases in disposables and decreases in the use of the sharing economy would only be temporary.

Limited retreat from cities

While the majority of Chief Executives believe that there will be lower workplace density than before, they remain divided about what role cities will play in the future: 34% believe the shift towards de-urbanisation will continue; 38% believing it is temporary.

Divided about the role of government

Business leaders are not expecting extended government support, with the majority believing state intervention to be a temporary feature, despite the potential for governments to use the support to influence COVID-19 recovery and policies impacting business.

Less than one in three believe government support will be sustained, despite a gloomy outlook for global and organisational growth prospects in the next 12 months.

One in five respondents say they declined government backed support for their business during the pandemic.

ChangeScout Scoops Bronze Trophy at Brandon Hall Group Awards

ChangeScout, a change management solution that accelerates and simplifies complex change programs in real time, has won a coveted Brandon Hall Group bronze award for excellence in the “Best Advance in the Unique HR or Workforce Management” category.

Organisations are struggling to keep up with the rapid pace of today’s digital disruptions, while simultaneously facing pressure to deliver quicker, more seamless change transformation. ChangeScout combines cutting-edge technology, onsite access to experts, and Deloitte’s unique change methodology to transform the way change is delivered.

ChangeScout enables organisations to drive successful transformations by covering the key aspects of change management, including methodology, technology, expertise and insights, enabling organisations to innovate and grow to get the most value out of major change investments.

“We developed ChangeScout to provide structure when companies are implementing new programs and making crucial changes to their business,” said Mike Bentley, the current managing director, Deloitte Consulting LLP.

“As social enterprises, organisations increasingly need to become more adaptive to the external forces impacting their business and workforce, increasing the need for specific tools to manage the process. We are thrilled the Brandon Hall Group recognised the value and potential of ChangeScout.”

This is the second consecutive year Deloitte has been recognised by the Brandon Hall Group for its Human Capital products. In 2017, Deloitte’s ConnectMe received Gold recognition in the Best Advance in Emerging Workforce Management Technology.

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