The Financial sector is made up of organisations that provide financial services to commercial and retail customers. The sector comprises a range of industries including Banking, Insurance, Investments, Accountancy and Real Estate organisations. Whilst the sector has recently seen profitability boosted by increases in interest rates, organisations still face considerable challenges through 2023 and beyond.
The uncertain macro-economic climate coupled with digital disruption across the sector has meant that organisations need to accelerate change in order to remain competitive whilst opening up new channels for growth. This creates a significant opportunity for procurement in the financial services sector, and maybe not before time.
It can be argued that the role of procurement has long been misunderstood in financial services. Like many industries, those in the front office have thought of procurement as a necessary back-office process, without any particular bearing on their own role.
Procurement has also historically been pigeonholed in financial services as focusing on how costs could have been controlled as the basis for future planning. This has given procurement a reputation for ‘looking backwards’, as opposed to being a business enabler and transformer.
In the post-pandemic world and given the backdrop of geopolitical tensions, the cost-of-living crisis and the requirement for rapid innovation, this misconception appears to finally be changing, with the benefits and potential of procurement now being both understood and realised. Procurement doesn’t just have to be about cost-cutting instead, it can play an important role in driving transformation and performance across an entire organisation.
How the finance sector can utilise procurement
Now is the time for procurement teams to look forward and position themselves as the catalyst for transformation. As experienced procurement consultants, we have long been aware of how integral procurement is to the success of organisations across all sectors, and it seems that the financial sector is now taking note.
This is most evidently visible in a number of notable areas with the first being digitisation. Over recent years, the majority of the finance sector has taken steps to become truly “digital.” With changing regulatory environments, growing expectations of tech-savvy customers and the emergence of disruptive technologies, the opportunity has opened for procurement to deliver holistic category management of its major spend.
When it comes to digitisation, it is clear that in order to deliver market-leading innovations at pace, organisations will need to collaborate with a third-party ecosystem that is not only differentiated from that of their competition but also hugely transformed from the historical landscape. Procurement teams have a key role to play in identifying, sourcing and harnessing these partnerships through the development of creative risk and reward outcome-based commercial relationships. Through ensuring a more coordinated allocation of resources, procurement teams can help source the right products and services to ensure smooth and effective delivery of digital transformation.
Secondly, whether it be through cyber incidents, supply-chain disruption, carbon reduction or the impact of changes in legislation and regulation; Third-Party risk management has quickly risen to the boardrooms of many organisations in the Financial Services sector. Within this area, forward-thinking procurement teams have the opportunity to not only get the attention of the CEO but also to truly add value beyond savings.
Furthermore and finally, in order to revitalise growth, the finance sector must adopt new strategies and learn to adapt more quickly, leaving rigidity at the door. Organisations should take this opportunity to embrace the efficiencies that effective procurement can offer. For example, organisations may lean on procurement teams to address efficiency challenges in the physical workspace, such as resourcing of physical spaces, as many financial institutions reconfigure their workspaces to facilitate more flexible and cost-effective working practices in the aftermath of the pandemic.
The power of procurement in the finance sector
Procurement is slowly emerging from the back office and being recognised as a function that can support performance of the front office teams, and play a vital part in the success of an organisation as a whole. The power of procurement is finally being realised across the financial sector.
Procurement in the Financial Sector: How Accelerate can help
At Accelerate, we understand the specific challenges faced by the Financial sector, having built up extensive experience within the industry. We are a team of entrepreneurial procurement leaders who have led and transformed global procurement functions and service provider organisations.
Whilst our background is in procurement, our work goes beyond procurement alone to positively impact all areas of your business and help it to realise its full potential.
We can lend our assistance across areas such as FM, Capex, Marketing, Professional Services, HR, IT, direct materials, supply chain and logistics.
To find out more about how we can assist you, get in touch today.