Today, retail banks that are implementing a CRM system, or brokers installing an algorithmic trading platform are doing so in the shadow of inevitable regulatory changes, possible mergers or acquisitions, heightened global competition and above it all, a need to drive efficiency throughout the business.

There is no escaping the fact that the financial services industry is facing some major changes. This is not new: the industry has rarely if ever stood still and the advent of automation and advanced technology has increased the pace of change dramatically in recent years.

But events of the last eighteen months mean that change is unlikely to happen in single discrete packages. Having been the dominant partner for many years, reward is now taking a back seat. Risk in all its forms is now stalking the streets of the world’s financial centres.

Today, retail banks that are implementing a CRM system, or brokers installing an algorithmic trading platform are doing so in the shadow of inevitable regulatory changes, possible mergers or acquisitions, heightened global competition and above it all, a need to drive efficiency throughout the business.

That’s a tough ask. Each one of these scenarios requires a significant amount of change in its own right. Just think how tough integrating two organisations with different cultures, systems and processes is. The reports and rumours emerging from Wall Street, which is coming to terms with unprecedented levels of M&A musical chairs, are enough to tell us what a challenge it can be.

The current climate means that internal needs are no longer the sole motivation for change. External events are dictating the nature and the timetable of any number of projects.

That means every organisation in the financial services sector needs to be prepared for change. They need to understand what change really means in terms of what it does to a business, its people, its partners and its customers. At a time when change can be imposed as well as chosen, organisations need to make change management part of their own culture so that they are best able to tackle whatever lies ahead on the road to recovery.

But what does change management mean? A haziness surrounding the definition is one of the reasons that change management is often sidelined as a soft option, rather than the critical function it actually is. Regardless of the words used to give it shape and scope, the most important thing about change management is that it is synonymous with project planning and delivery.

Change management is not a minor consideration, an afterthought or the stuff that is passed on to HR to handle. It is a central function from which all other aspects of a project will flow. In the simplest terms change management is the process by which any organisation can adapt to internal and external influences in both a proactive and reactive way. And it requires a sustainable, rigorous disciplined and a systematic approach.

It is effective change management that ensures that new ways of working – and all the systems, processes and infrastructure that support that – are embedded into the organisation and adopted on a permanent basis. The objective is to manage individuals and groups of people through the ‘change curve.’ After all, it is as a collection of individuals that a company functions and puts its ideas and value into practice – so people need to be ready, willing and able to adopt new behaviour, processes and technology.

And this is where the complexity starts. The number of people who are genuinely avant-garde, who look for and embrace the new and unfamiliar is very, very small. The overwhelming majority are at heart fundamentally conservative beings. Change is disruptive: it consumes energy, it takes time to assimilate. And most people will find the quickest, shortest path round it that they can. The biggest reason for project failure is that the people it is imposed upon expend more thought in circumnavigating new processes and systems in order to remain in their comfort zone of the safe and familiar.

Overcoming these natural psychological barriers is critical to change management, and leadership teams that fail to plan for the human side of change often find themselves wondering what happened, as the final form of even the best laid plans turn out to be mere shadows of their initial, glorious vision.

The people factor is not incidental to change management – it is change management. Placing individuals at the centre of any proposed changes, recognising the inter-related nature of proposed change activities and understanding the impact on people at every level is paramount when planning any successful programme of change. People need to understand what’s in it for them on a personal level, rather than on an abstract business level. If they are required to alter the way that they work, often dramatically, then they will want to know why.

So successful leaders anticipate and manage resistance through effective change management, particularly now, when fear and uncertainty have become common currency. They deploy the right combination of political skills, motivational style and psychological insights and back them up by effective communication, involvement and engagement with staff. People need to feel part of the process, rather than mere receivers of imposed change.

That’s why there are no universal change management solutions, no tick list of must-do activities. Instead the tools, techniques, models and methodologies used will depend largely on the existing culture, values, people, and behaviours within the organization as much as on those to be developed.

But of course, managing people is not the only source of complexity, particularly in large financial services organisations with the multiple business entities, functions, subsidiaries, reporting structures and, in many cases, international offices. Varied cultures already exist within many firms in this industry, and aligning all of them to a single future vision and a common way of working is no mean undertaking.

What’s more, there is no easy way to change an existing process. Either change will be required while the process is still running, or it will need to be stopped or dual processes will need to be run simultaneously. None of these scenarios is straightforward, and all require considerable planning, communication and organization.

This in turn means that any change management programme needs to know exactly where it is going and what it is trying to achieve. Losing sight of the desired outcome, adding incidental tasks or confusing the potential benefits of any change programme will muddy the waters and minimise the possibility of the project delivering the business case.

This is important because as the project progresses, inputs will come in from those people who have been successfully engaged. The feedback has to be incorporated into the project if those people are to be kept on board.

So change management is not to be underestimated. It requires a clear goal, communication and senior leadership from the very beginning. But getting it right ensures that whatever vision the firm has for the future will be achieved. It ensures that individuals and groups of people play their part as advocates to bring about the desired change. It increases the speed at which the business case and financial benefits can be achieved.

But effective change management goes beyond delivering results for the immediate programme. As well as reducing the short-term dip in employee productivity while change is implemented it increases long-term productivity. Making change management part of the new culture also helps mitigate and manage risk in the longer term, and improves decision-making throughout the organization.

But most of all effective change management strengthens the organization’s dynamic and adaptive responses to any given situation and gives it the ability to handle change – predicted or otherwise – in the future. In an ever-changing, constantly demanding environment change management is a vital success factor.