Implementing a Project Management Office (PMO) is often an arduous task for companies. A PMO will change the way a company operates (ideally for the better), but this can create uncertainty for the entire organization. Skeptical employees and stakeholders might not immediately see the value that a PMO can bring to their business. Office politics can also rear its ugly head and could leave project managers uneasy thinking they’ve lost control over projects that have been handed over to another department. Overcoming these obstacles and building a robust PMO is no easy task, but despite this, PMOs have proved to play a vital role in ensuring successful project and portfolio management across many industries.
While all industries can benefit from a PMO, the financial industry has eagerly embraced PMOs. The rise of PMOs in banks, credit unions, and other financial institutions is not just because there is a need for managing many projects, but to also address several obstacles unique to the industry. To create and operate a successful finance PMO, you need to understand what these unique industry challenges are. Below are three of the main challenges we’ve identified along with our recommendations on how to overcome them.
You CAN Teach an Old Dog New Tricks
The financial industry is extremely well-developed, and some might even say it is an “old school” industry. The way in which financial institutions, such as banks and credit unions, operate has been very well-defined for many years. However, technology is proving to be a huge disruptor in this process. Consumers can conduct their financial business in new ways thanks to recent technologies, which has put pressure on financial institutions to develop and offer these technologies. Activities like mobile banking, digital wallets, and online shopping have put serious demands on this traditional industry to adapt. In addition to changing consumer behaviors, technology has also led to an increase in competition for longstanding institutions.
Fintech (financial technology) is a rapidly developing sub-industry that is funneling consumers away from traditional banks and credit unions. To compete, these older institutions are being forced to innovate. As banks, credit unions, and other financial institutions accept the need to innovate, they are inadvertently accepting the need for a PMO. Innovation is a race. This means you can’t afford to miss deadlines. A PMO in a financial institution can ensure innovative projects that give a financial institution a competitive advantage are finished on time, on budget, and before competitors. But because nothing in life is easy, innovation must also be balanced with regulations.
A Watchful Eye
The financial industry has always been subject to regulations, but after the 2008 economic collapse, an even more watchful eye was placed over the industry in the form of additional regulations. You might say innovation and regulation are opposite forces, but whether that’s true is a moot point. All financial institutions have serious regulations to adhere to. This means there is no room for error when implementing compliance projects. As financial institutions grow, so do the list of regulations. Even for institutions that have experienced no change in growth, regulations are constantly changing.
Staying compliant with federal regulations is an incredibly complex task. This task becomes even more complex with digital technology. Regulations protecting consumers’ private financial information has become a particularly tricky hurdle to tackle for the industry as it tries to provide innovative technologies. Adding features to a banking mobile app will require input from stakeholders across organizations to ensure compliance. It’s easy to see the value in a PMO that can organize these stakeholders and ensure compliance projects meet regulatory deadlines. This is a crucial function of a finance PMO. A successful PMO can tie all these requirements together, package them and deliver the completed project. However, the ability of a PMO in a bank, credit union or other financial institution to deliver a completed project on time starts with initiating the right projects.
No Risk, No Reward
There is no question that the regulatory environment and the need for innovation in the financial industry has generated a profound effect on projects. Projects in the financial industry are often extremely high-profile and high-risk. This means new project initiatives need to be considered very carefully in a thorough and well-defined refinement process. A project such as creating new functionalities on a mobile banking app could open a bank or credit union up to significant liability if certain regulations aren’t followed and security measures aren’t put in place. The project would also need a significant investment of very specialized resources. Because of the risks and investments, deciding on a new initiative like this needs to be a thorough and objective process.
Once new initiatives are added to the project portfolio, they need to be prioritized. Compliance related projects have an obvious priority, but banks and credit unions cannot expect to only work on compliance projects. Finance PMOs must work to find the balance between these types of projects to ensure business growth.
Why the Financial Industry Loves Lean PMOs
In the financial industry, project execution is non-negotiable. Whether a project is regulatory or not, institutions cannot afford delays and setbacks. This means that banks, credit unions, and other financial institutions rely heavily on PMOs. But, not all PMOs are created equal. Just because a financial institution has a PMO does not mean they will finish projects. PMOs themselves can be complicated organizations and if they aren’t run properly, they won’t do any good. Because PMOs can be cumbersome, many financial institutions are adopting a lean approach to their PMO. By equipping your PMO with only the essential project data, you create a nimble and adaptable PMO that is quick to implement, easy to scale and just as effective.
At Meisterplan, we understand the need for financial institutions to operate a lean PMO. We developed our Project Portfolio Management (PPM) software and our Lean PPM™ framework with lean processes in mind. Your project managers only need to provide a minimum amount of project data for your PMO to start building powerful project portfolios with the right people working on the right projects. To see how Meisterplan can help improve your PMO, sign up for a free 30 day trial today or contact us to schedule a one on one demo.