Identify and discuss common external and internal drivers of change within your industry
Identify and discuss common external and internal drivers of change within your industry. Discuss how these drivers challenge existing organizational structures and necessitate adaptation while adhering to core values.
Sample Expert Answer
The finance industry is one that is prone to changes in internal and external organizational dynamics that have a far-reaching impact. One of the external factors that brings change to the industry is regulatory changes, such as Basel III or Dodd-Frank, which can impose stricter compliance standards, forcing financial institutions to adapt their operations and strategies to match the changes. Another external factor is changes in technology, for example, the advent of blockchain technology, which has transformed how financial services are delivered, leading to greater efficiency, automation, and customer-centric solutions (Javaid et al., 2022).
Market dynamics, for example, economic recessions or booms, interest rate changes, or global trade disruptions, are also noteworthy drivers of change that force financial institutions to adjust their risk management and investment strategies. From internal forces, we have changes in leadership or organization culture, including shifts toward more agile or innovative business practices, that can drive internal transformations in how financial firms operate. Another internal driver is the desire to achieve cost and operational efficiency, which often leads financial firms to adopt new technologies, restructure, or streamline processes.
The listed drivers challenge existing organizational structures in various ways, necessitating adoption. For example, changes in technology like the introduction of blockchain have disrupted the products offered by financial institutions, necessitating a shift from traditional products to more tech-driven models, often requiring a rethinking of marketing and customer engagement strategies.
Another example is the new regulatory frameworks, which often demand structural changes, such as the implementation of new compliance departments or adjustments to risk management processes, which may clash with existing organizational hierarchies. However, firms must incorporate regulatory compliance into their operations without compromising their core values like trust and transparency (Graham et al., 2022).
References
Graham, J. R., Grennan, J., Harvey, C. R., & Rajgopal, S. (2022). Corporate culture: Evidence from the field. Journal of Financial Economics, 146(2), 552-593. https://doi.org/10.1016/j.jfineco.2022.07.008
Javaid, M., Haleem, A., Singh, R. P., Suman, R., & Khan, S. (2022). A review of Blockchain Technology applications for financial services. BenchCouncil Transactions on Benchmarks, Standards and Evaluations, 2(3), 100073. https://doi.org/10.1016/j.tbench.2022.100073
