Leveraging Product Managers to fuel growth and efficiency in capital market

With the relentlessly accelerating pace of change, the current environment is a transformative time for the capital markets industry. Client expectations are higher than ever, increased operational efficiency is required to meet internal targets, and front-office focus on ROI for infrastructure spend has never been sharper. All of this pressure to improve the bottom line has resulted in FIs focusing their efforts on offering new revenue- generating capabilities and implementing innovative, digital-first products. However, due to a combination of factors such as deeply rooted governance structures, poor incentive mechanisms, and scarcity of subject matter expertise, capital markets organizations find themselves exercising inefficient business practices:

· Products are being designed, developed, and delivered with little or no customer/user insights and outcomes acting as the ‘north star’

· Products are being implemented/released with a high risk of accruing technical debt and failure to adjust to changing business and customer needs

· Functional groups (i.e., front office, technology, risk, etc.) are being governed in silos without efficient channels of communication

Capital markets teams must understand that often these inefficiencies stem from a culture based on a ‘project mindset’ solving for ‘product mindset’ challenges.

The technology industry has become an expert at nurturing the product mindset and effectively establishing a culture conducive to digital transformation across all organizational levels. A key ingredient to their success has been their ability to leverage the product manager role successfully. The tech industry treats a product manager role much akin to a ‘mini-CEO:’ they set the vision and oversee the shipping of products, shaping the end-to- end development process and enforcing strategic objectives in areas targeted by the firm.

Through the product manager role, financial institutions bolster their firm in the areas of customer/end-user focus, product leadership, cost optimization, and a more collaborative workforce.

Customer/End-User Focus

· Product managers act as pillars to drive the firm’s strategic goals and investments through emergent opportunities from customer/end-user interactions and research. They maintain a strong focus on better outcomes, including experience and productivity. They propel better outcomes in two ways: facilitating digital integration in areas targeted by the end-user (e.g., trader, banker) and by focusing finite resources on not building the wrong thing.

Product Leadership

· Product managers oversee product selection, creation, development, release, and optimization to ensure that the firm is aligned with the long-term and short-term vision at all levels of the organization.

· They ensure focus on digital advancement, facilitating early adoption, and release to keep the business competitive with the market both in operational standard and in key features.

· Adoption is a key part of this puzzle, with the product manager actively ‘marketing’ the benefits and rationale behind the new offering. This happens well before release by keeping early adopters close and within the build, test, learn feedback loops.

EFFICIENCY

Cost Optimization

· Product managers work with and reduce the burden of non-revenue generating (NRG) tasks carried by revenue-generating resources by creating a more efficient channel to rationalize technologies from a proof of concept (POC) to release.

· Product managers help optimize medium to longer-term enterprise cost savings by managing technical debt and ensuring minimal rework required in the future.

More Collaborative Workforce

· Product managers rarely have hierarchical ‘power’ and are most likely to be highly engaging and influencing when working across functional and business silos. Working between business, technology, and other functions, they establish upward/downward gateways of communication.

· Product managers also have a positive operational impact by ensuring end-user fit and seamless coordination, reducing bottlenecks in day-to-day operations and implementing change in the areas most needed.

CAPITAL MARKETS FIRMS CAN CONSIDER SEVERAL WAYS HOW TO EMBED THE PRODUCT MANAGER ROLE

· Embrace the product manager role and the mindset amongst the existing technology change leadership. Clarify product manager responsibilities and ensure that those areas of the bank where Product Management is already embraced are cross-sharing experiences with the areas that are less mature.

· Hire and upskill product management staff in front- office functions where more discrete responsibilities can minimize ‘side-desk’ change culture and give back time to the front line. Consider the need for product managers to have extensive business knowledge in that particular area of the bank (e.g., product, market). Developing an internal career path to product management could be one of the ideas.

By Joseph Suh, Associate, Ervinas Janavicius Senior Consultant, Alex Hamlin, Principal Consultant – CAPCO