Boards 'vital' for financial institutions' transformative development: McKinsey

Chairman and board of directors will play key roles in financial institutions’ transformative development in the near future and they should assume new roles to embrace the opportunities and challenges in an age of change, global consulting firm McKinsey&Company said on Thursday.

Banks are under great pressure to seek quality and compliant development and strengthen their digital marketing efforts to deliver more customer-centered services in the face of online competition.

“The next three to five years will be a critical period for China's banking industry and it will be a watershed as strong players and first-movers are to stand out and win,” said John Qu, senior managing partner at McKinsey & Company.

Many boards in the financial-services sector, however, are underreacting to the stresses and opportunities and deficiencies persist in the way boards guide strategy, oversee risk management, make succession planning and carry out other essential tasks, the consultancy noted in its new quarterly banking report.

To meet the new challenges, forward-looking directors at financial institutions are advised to take on new roles such as deploying technology and digital strategies, assisting management in making transformations, managing crises and risks and promoting mergers and acquisitions, in addition to their traditional roles of making company strategy and ensuring compliant operations.

For instance, to boost digital innovation, the board could bridge their cognitive gap, fully understand the disruptions brought about by digitalization and select suitable directors to  improve digital capabilities, the report said.

Meanwhile, chairmen need to actively learn from leading enterprises, become “a prophet, a herald, a preacher” to spot problems before they arise and promote transformation and innovation.