With numerous challenges affecting the banking sector in 2024, banks need to get more creative to invest in new capabilities and regulators to ensure financial stability, competition, innovation, operational resilience, governance, and public confidence. Through bringing in an improvisational culture, creativity, risk-taking, and collaboration empowers employees to take calculated risks, and utilise innovative thinking. The proactive embrace of improvisation can propel the banking industry towards sustained success as the economic and financial landscape changes.

 

Eric Vigo

Managing Director and Founder of Rebooter Group

Originally authored by

KEY TAKEAWAYS

1. Embracing improvisation can help banks navigate challenges, adapt to changing customer needs, and remain competitive in the evolving financial landscape.

2. Fostering an improvisational culture requires creating an environment that encourages creativity, risk-taking, collaboration, and recognizing innovative thinking.

3. Applying improvisation across departments like customer service, product development, and IT can enhance adaptability, innovation and drive sustained success for banks.

The banking sector in 2024 is facing a series of challenges that have shaken it out of complacency.

These challenges include the Royal Commission, the tightening of mortgage loans, and the general landscape of change from societal disruption events such as Covid, technology, remote working, supply chain interruptions, persistent high inflation, and automation. Together, these factors represent a real-world version of VUCA (Volatility, Uncertainty, Complexity, and Ambiguity).

Along with these global and domestic economic conditions, banks are also facing competition from non-bank lenders, technological innovation, and changing consumer preferences. To remain competitive and meet evolving customer needs, banks are investing in new capabilities. Regulators are focused on ensuring that banks balance financial stability with promoting competition and innovation, operational resilience, strong governance, and maintaining public confidence. These are critical factors for banks to navigate challenges and remain trusted institutions.

Decision-makers have become more aware of the need to invest in soft skills, and one form of soft skills that has become prominent in the USA is applied improvisation. Various sectors, including the banking industry, use one form of ‘conscious’ improvisation or another.

This article explores the growing recognition of improvisation’s significance in organisational management, focusing on its application within the UK financial services sector, which has echoes for financial institutions in the ASEAN region.

Wells Fargo, a bank in the USA, recognized the importance of improvisation and has brought the bank’s financial literacy curriculum to life through performance-based theatre exercises and improvisational activities for middle school students. The programme aims to engage middle school students in a dynamic and interactive learning experience.

The Need for Improvisation in Banking

As the COVID-19 pandemic has highlighted the necessity for businesses to adapt quickly to unprecedented circumstances, and improvise on the run as never before. For the banking sector, the ability to improvise can be a game-changer. When an organisation finds itself at risk due to changing market conditions, customer preferences, or financial challenges, a more innovative and flexible approach becomes essential. If a bank lacks the organisational dynamic and openness to improvisation, it may be too late to adapt when faced with the risk of losing customers or even bankruptcy.

Improvisation and Financial Literacy

Improvisation is not limited to the stage or the classroom; it permeates our daily lives. From conversations with a grocer or a bank teller to observing toddlers babbling at the park, we encounter moments of pure improvisation. By embracing this concept, banks can cultivate a culture of adaptability and innovation, enabling them to respond effectively to changing customer needs and market dynamics.

The Benefits of Improvisation in Business

As improvisation as a blend of intuition, creativity, and bricolage, it is driven by time-paced pressures. Improvisation has a central role in helping an organisation achieve goals amidst rapid change. The use of improvisation through jazz and theatre, we can see improvisation’s correlation with innovation and adaptation.

Improvisation can provide valuable skills for effective communication, collaboration, and problem-solving.

Improvisation are the same skills required in everyday life – adapting to changing circumstances, thinking on their feet, and collaborating effectively. 

The basis behind fostering an improvisational culture in banking

To foster an improvisational culture within the banking industry, organisations must create an environment that encourages creativity, risk-taking, and collaboration. This can be achieved through four avenues:

Many of these points are practiced and trained individually, and improvisation wraps them around into one methodology. And ways in which these four avenues can be implemented within different departments are: Customer Service Department: Customer service representatives often need to improvise and think creatively to resolve unique customer issues or complaints in real-time. Improvisation skills can help them to listen well enough to use bricolage to come to innovative solutions which are tailored to each customer’s specific situation.

Deepen Active Listening

Improvisation workshops and training programs for employees at all levels, focusing on developing skills like active listening, spontaneity, and teamwork

Encourage Collaboration

Encouraging cross-functional collaboration and open communication channels to facilitate the exchange of ideas and perspectives.

Support Employee Risk Takers

Empowering employees to take calculated risks and experiment with new approaches, while providing a supportive environment for learning from failures.

Reward Efforts

Recognising and rewarding innovative thinking and improvisational problem-solving efforts

Intersections Between Typical Banking Teams and Applied Improvisation

Typical Teams within Banking Institutions
Use of Applied Improvisaton to Help Teams Reach Outcomes or Attain Goals
Product Development/Innovation Team
Teams tasked with developing new financial products or services can greatly benefit from improvisation techniques. Allowing some level of spontaneity and real-time collaboration can spark innovative ideas that a rigid, planned process may miss. And a rigid system prefers people to stick to the middle and deviate little.
Risk Management Department
While risk management requires following procedures, the head of risk mentioned that "you have got to improvise all the time to find the solution.”1 Improvisation can aid in innovatively addressing unforeseen risks or developing new risk mitigation strategies. And a generalise improvisational work culture cam help mitigate reaction to risk situations, even if it has little or no effect on the existence of risk.
Lending/Credit Department
Lending departments may need to improvise and innovate in structuring loan products or credit terms to meet unique customer needs or market conditions, as mentioned regarding "being innovative in the way lending can be structured." Again, a culture driven by improvisation will allow tailored solutions to flourish more, due to a willingness to let people speak their ideas without the reflexive need to immediately edit.
Information Technology (IT) Department
IT innovators play a crucial role in driving organisational success. They harness improvisation and creativity, utilising a flexible IT infrastructure, to swiftly address strategic opportunities and adapt to the dynamic technology landscape. By leveraging their ability to improvise, they find innovative solutions to complex problems and seize upon emerging opportunities. This flexibility extends to the IT infrastructure, which is designed to be agile and responsive, enabling rapid deployment of resources and adaptation to evolving technological trends. In doing so, IT innovators ensure that the organisation remains competitive, efficient, and capable of leveraging technology to its fullest potential.
Training/Human Resources
Improvisation training can be used to enhance employees' creativity, problem-solving, adaptability and other skills needed for the bank to remain innovative across departments.

In Summary

This article underscores the transformative potential of improvisation within the banking sector, where banks can cultivate a workforce that is more agile, adaptable, and equipped to navigate the ever-changing landscape of the financial industry.

This approach not only enhances customer experiences but also positions banks as innovative and forward-thinking organisations, capable of thriving in an increasingly competitive market.

To help the banking industry to evolve, the proactive embrace of improvisation can propel them towards sustained success as our economic and financial landscape changes.

References

Steve Leybourne (4/2006), ‘Managing change by abandoning planning and embracing improvisation’, Journal of General Management’, https://www.academia.edu/28847052/Managing_change_by_abandoning_planning_and_embracing_improvisation?auto=download&email_work_card=download-paper

Steve Leybourne (10/11/2009), ‘Culture and Organizational Improvisation in UK Financial Services’, Journal of Service Science and Management’, https://www.academia.edu/28847057/Culture_and_Organizational_Improvisation_in_UK_Financial_Services?auto=download&email_work_card=download-paper

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