43% of financial services firms turn to independent professionals for flexible consulting support
Research by Odgers Connect, the consulting arm of Odgers Berndtson, has revealed that the majority (43%) of financial services firms are turning to independent consultants over traditional management consultancies for more flexible consulting services.
The research, which surveyed 250 board-level executives across large enterprises in the UK, Germany, the Netherlands and Switzerland, found that a greater need for flexibility (62%) is the most significant driver of change in financial services companies, suggesting the preference for independent consultants over large firms is a result of the growing trend towards flexibility in business models.
The second most important factor for using an independent consultant over a traditional consultancy was price (38%), followed closely by the higher quality of consulting work (35%) they offered.
However, financial services firms would turn to a management consultancy to meet internal capacity shortages, with 57% of businesses in the sector citing this as the primary reason for working with a traditional consulting firm. Alternatively, just 17% would use an independent consultant for this purpose.
Adam Gates, principal at Odgers Connect, said, “When it comes to mass resourcing, the on-demand ‘consulting pyramids’ and hordes of junior analysts supplied by big-four type consultancies is an easy option take. However the growing necessity to adapt rapidly to disruptive technologies and react to shifts in the market lends itself to the flexibility of independent professionals, with financial services firms valuing the blend of strategic direction and hands-on implementation they can bring to a range of business issues.”
When comparing the quality of work delivered in key business areas, independents came out far and above their corporate counterparts. Financial services firms thought independent consultants delivered a higher quality of work in risk and regulation (68%), Technology (65%), Operational Improvement (54%) and Business Transformation (51%).
The majority (43%) of the financial services sector would seek out critical skills from independent consultants, whilst a mere 17% would turn to a traditional management consultancy for specific area expertise.
Gates added, “With mounting regulation in the sector and growing competition from challenger banks, financial services firms are doubling down on digitisation to respond to regulatory pressures and provide a more seamless customer journey. Combining specialist skillsets with hard-won experience, independent consultants are proving to be an effective resource in meeting the rapidly evolving legislative needs of the financial services sector.”
Despite a shift in the consulting buying behaviour across the financial services sector, independent professionals still have to contend with the level of quality assurance and international reach the big firms can offer. The main factors deterring financial services firms from hiring an independent consultant was their lack of quality control (38%) and global coverage (30%).
Gates commented, “With offices in most countries, mainstream consultancies seem like a no-brainer for firms with overseas projects. However this mentality is starting to go out of fashion, with an increasing number of firms parachuting in elite teams of independent consultants for more agile and senior levels of engagement.”
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