New dynamics in our post-pandemic future

It would be fascinating to know just how many of our banking leaders are feeling somewhat exposed by their handling of this devastating and ongoing pandemic. Hindsight is leading us to believe that a global crisis of this scale was a well known possibility, which begs the question… why were so many banks caught unprepared?

With little historical data available on which to predict future possible scenarios, many businesses are in a state of fearful uncertainty, as it is virtually impossible to forecast what form the future economic landscape will take. Using the 2008 financial crisis as their example, some claim that the banks have been here before, but sadly this is not the case, as the current situation is fundamentally different in scale, severity and time frame. Although it’s fair to say that banks are in a much stronger position today, the fallout from recent events has shown there is still a great deal more to do. So what capabilities do banks need to build now, in order to more successfully deal with an unsure future?

Dynamic capabilities require the right mindset

Managing uncertainty requires resources that can adapt very quickly to changing environments, often referred to as ‘dynamic capabilities’. Adopting dynamic capabilities as part of an overall change strategy has already been proven to help banks transform their existing culture, which in turn enables them to more efficiently exploit new business opportunities. However, dynamic capabilities cannot exist in isolation; they must be supported by strong and consistent leadership. Leaders need to create the right ‘growth mindset’ which means moving away from a binary frame of mind (Dweck, 2017) and requires the elimination of organisational ‘Groupthink’.

Know your organisation  

To better manage uncertainty, banks need to first recognise and then understand their key vulnerabilities. By identifying process bottlenecks and analysing operational capabilities, banks can uncover inefficiencies or gaps in their product and service offerings. But running a bank efficiently often implies a trade-off; processes and procedures have to be continually ‘fixed’, allowing little flexibility to accommodate the impact of market volatility or unforeseen circumstances.

Dynamic capabilities (DC), such as innovation, can be developed over time by overcoming challenges posed by the external environment (Eisenhardt & Jeffrey, 2000). Now that banks can recognise technology and changing customer demand, this creates both an opportunity and a challenge in equal measure. Will we see more innovation and agility, because clearly the adoption of dynamic capabilities is not yet a given?

Positive change as part of our changing future

Fortunately it’s not all doom and gloom, because past crises have also been known to trigger positive transformational change. So, whilst it looks like uncertainty will be a key feature of our economic future for some time to come, much could be achieved by incorporating dynamic capabilities that embrace innovation and agility into all new business strategies. Surely this will help all firms to be better equipped to deal with future situations; but as we have not seen that many agile banks yet – maybe it is still an oxymoron?



Dweck, Carole (2017) ‘Mindset – Updated Edition: Changing The Way You think To Fulfil Your Potential’. Publisher Little, Brown Book Group

Eisenhardt, Kathleen & Martin, Jeffrey. (2000). Dynamic capabilities: what are they?. Strategic Management Journal. 21. 1105-1121. 10.1002/1097-0266(200010/11)21:10/11%3C1105::AID-SMJ133%3E3.0.CO;2-E.

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