Ongoing volatility has highlighted the importance of governance models, the consequences of deceptive incentive schemes, and the inadequacy of risk management practices across the financial institutions industry. The problems that have been exposed have occurred throughout organizations, both in terms of overall strategy (such as major portfolio and risk decisions) and governance models (such as the role of the board and the relative power of risk managers versus business unit managers). Increased visibility has led to tighter regulatory control, changes in legislation, and government investment—all of which create a more onerous regulatory burden challenging the profitability of many financial products.

Responding to these changes requires defining and implementing best practices in such a way as to gain capabilities, minimize cost increases, and simplify communication with customers, employees, regulators, and investors.

A.T. Kearney has extensive experience in all aspects of improving governance, including:

• Defining the role of the center. Choosing, and then establishing, the role that best supports the financial institution's strategic goals is critical. We work with clients to help them craft the optimal corporate center along the continuum between a minimalist holding company where governance processes occur primarily at the business-unit level and a more comprehensive functional center with more centralization.
• Clarifying, introducing, and communicating improved best practices in corporate governance. Even in institutions with the gold standard in governance processes, the new sensitivities of regulators, politicians, and the public may make previously acceptable losses intolerable today—JP Morgan Chase's 2012 trading losses in London is an example. The role of boards of directors is also changing, as directors may be expected to become more involved and take on activist roles. New levels of disclosure and accounting policy changes may be necessary to raise capital at the lowest cost. We bring a wide variety of cross-industry, cross-institution, and cross-market experience for quickly identifying and implementing best practices in corporate governance.
• Organizational redesign. Developing a highly functional and cost-effective organizational design means starting with the business strategy and organizing around that strategy. Form follows function. A.T. Kearney has deep expertise in this area, including several areas critical to growth: defining roles and responsibilities, determining reporting lines and accountability, optimizing teams, streamlining hierarchical layers, and aligning job descriptions and talent requirements. Our expertise in program management and change programs ensures on-time, on-budget implementation of organizational, project, and cultural change.
• Improving and transforming management information systems (MIS). For a financial institution, management information systems are often critical to the success and cost-effectiveness of governance. Many financial institutions, however, have massive, exceptionally complicated IT investments and information flows. Gaps in governance and information can expose leaders to the risk of prosecution under Sarbanes-Oxley in the United States and similar legislation elsewhere. Complexity and lack of transparency are often compounded by acquisitions and regional differences in regulatory and reporting requirements. Dealing with this operational complexity can often distract organizations from ensuring tighter links between governance, business strategy, and supporting IT.

We also help large organizations align their IT infrastructure with business strategies and governance models, and are at the forefront of new cloud options.