Business

Why cross-functional teams lose information and how to prevent it

By Gaurav Rathi

Gaurav Rathi

The financial services industry is in an era of digital transformation. At the heart of this transformation are cross-functional teams working to bring new and upgraded products to the marketplace to meet the needs of modern consumers. Despite the increasing complexity of financial services designed to meet these consumer needs, costly information loss remains a lingering issue. And as most of the world’s value is concentrated in, or dependent on the financial sector, it is the primary target of bad actors in the marketplace. Critical information loss, including personally identifiable information (PII), can have disastrous consequences on a financial organization, including damage to the organization’s reputation and hefty regulatory fines.

In addition to the security concerns of clients’ private information loss is the loss of internal information created by failed communication and collaboration among members of cross-functional teams. This can result in poor decision-making, delays in launching new products, or even the introduction of completely unwanted products in the marketplace. To successfully address these risks requires a balancing act between organizational identification and execution of best practices and procedures while successfully implementing cross-functional teams to efficiently bring new products to market or improve existing ones.

Defining information loss in relation to cross-functional teams

Information refers to the broad category of data that is collected by an organization—user history, user feedback, specifications, traffic reports, location history, app downloads, search histories, bug reports, or any other relevant collectible information. Thanks to digital tools, information gathering occurs in real-time with consumer interaction in the financial services sector. Cross-functional teams communicating and collaborating efficiently can harvest, analyze, and leverage this data in a secure manner to create better consumer experiences. Examples of information loss include:

The data team not sharing bodies of data because the experience team did not ask for them.
The engineering team not adding critical features because they were not requested by the design team.
The experience and design teams simultaneously doing the same work because of a communication gap.
A product brought to market that is based on outdated data can result in a product that users don’t want or find too difficult to use.

How information loss occurs in cross-functional teams

Information loss amongst cross-functional teams can occur in many different ways, primarily due to human error or system failure that comes as a result of information silos. Information silos are detached groups or systems incapable of reciprocal operation with others that are or are supposed to be, related, thus not adequately sharing information but rather sequestering information within each system. They are detrimental to cross-functional teams and create critical and costly information loss. Assuming an organization’s teams completed the diligent work in assigning and utilizing the correct apps for collaboration, and their software is updated and correctly engineered, this leaves the large field of human error as the reason behind information silos.

Information silos occur due to a number of factors:

Cultural barriers: Cross-functional teams may include members from different cultures, backgrounds, and experiences. This can create challenges in terms of communication, decision-making, and problem-solving. Different cultural norms and values can lead to misunderstandings or conflict, which can impact the overall success of the team.
Individual biases: Team members may have varied perspectives or biases based on their backgrounds, experiences, or roles in the organization. This can lead to groupthink or cognitive biases, where certain information is dismissed or overlooked because it does not align with the team’s beliefs or assumptions.
Information overload: Teams often involve multiple stakeholders and sources of information. When there is too much information to process or too many opinions to consider, it can be difficult to prioritize or make decisions effectively. This can result in important information being lost or overlooked.
Terminology confusion: Cross-functional teams often involve members from different departments or areas of expertise, and they may use different terminology or jargon. This can lead to misinterpretation or confusion when communicating ideas or discussing topics, resulting in important information being lost or misunderstood.
Power dynamics/psychological safety: Cross-functional teams may involve members from different levels of the organization, with varying degrees of authority and decision-making power. This can create power dynamics that impact communication and collaboration, with some team members feeling hesitant to share their ideas or perspectives. It cannot be overstressed how important it is for organizations and leaders to create psychological safety on the part of all stakeholders/team members. This alone makes the difference between a collaborative workplace and a toxic one, as well as an efficient versus an inefficient cross-functional team.
Lack of trust: Cross-functional teams require a high level of trust among team members in order to be successful. When there is a lack of trust or a breakdown in communication, it can be difficult to collaborate effectively and achieve project goals.

The costs of information loss in cross-functional teams

Information loss can be costly in both massive and subtle ways. Loss of client information destroys an organization’s reputation, which is almost impossible to recover. There are also legal and regulatory consequences with this type of information loss. Furthermore, non-financial information loss can also be costly. Internal information in cross-functional teams can get lost due to a lack of collaboration and communication. For example, months of market research clearly shows that consumers are unhappy with the user interface of an application that is about to be launched, but the experience team does not provide this to the design team, because the team leader is concerned about being targeted as a “troublemaker” for delaying product launch.

In another scenario, consumer-centric market research can be lost because members of one team feel psychologically unsafe in sharing data. Perhaps the engineering team leader was recently disciplined and is afraid of being fired, so the team leader decides to “play it safe” and only offers the data requested by other teams. This results in removing a function during an app upgrade. Because the experience team members were tied up reviewing new market research data, they overlook asking about the reason for this change.

Information loss can extend the launch of a new user-friendly app, providing competitors with the opportunity to capture market share and create customer attrition. Additionally, information loss can result in poor decision-making because cross-functional teams may be using outdated data. This can tie up an engineering team for weeks, only to discover their work requires a complete do-over.

One of most dangerous results of information loss is a product released into the marketplace that is unnecessary or no longer wanted. This is unlikely to occur if the cross-functional teams have all the necessary tools in place and the human reasons behind information silos are remedied.

Best practices to prevent information loss

Information loss is not a matter of chance, and its prevention is not simply good fortune. Industry leaders with years of experience have isolated the causes and areas that contribute to the loss. Through the successful implementation of best practices, the systematic reduction of information loss can be ensured.

Every financial services organization is responsible for setting up guidelines and documented best practices to reduce information loss in cross-functional teams. It is critical that these best practices address third-party vendors as well as the organization’s employees. These best practices cover six broad categories:

Data privacy and security is the set of measures put in place to safeguard sensitive financial information from unauthorized access, use, or disclosure. It encompasses the protection of customer data, such as personal and financial information, as well as the institution’s own data assets, including proprietary financial models and strategic plans.

Data governance is the set of policies, procedures, and controls put in place to ensure the appropriate management, use, and protection of data assets. It encompasses the legal, regulatory, and ethical frameworks that govern data handling practices and seeks to mitigate risks associated with data privacy, security, and compliance.
Risk management involves identifying, assessing, and mitigating potential risks that could adversely impact a financial institution’s operations, financial performance, or reputation. It encompasses a range of activities, including risk assessment, risk mitigation, risk mitigation, risk monitoring, and reporting.
Disaster recovery is the set of policies, procedures, and technologies used to restore critical business functions and data in the event of a disruptive event, such as a natural disaster, cyberattack, or equipment failure. It includes contingency planning, data backup and restoration, and testing and validation procedures to ensure a rapid and effective response.
Compliance and regulatory requirements are the set of laws, regulations, and industry standards that financial institutions must adhere to in order to operate legally and responsibly. They encompass a range of areas, such as consumer protection, anti-money laundering, risk management, and data privacy and security.
Transparency is the clear and open communication of financial information and practices to stakeholders, including customers, investors, regulators, and the public. It involves disclosing relevant financial data, fees, risks, and performance metrics in a timely and easily accessible manner to promote trust, accountability, and informed decision-making.

To make the most of these best practices, it is crucial that leaders create an environment where all team members feel empowered to freely communicate and collaborate. Without this culture, no matter how much is invested financially, tremendous information loss can still occur. Another vital action is for organizations to provide the relevant technological tools to assist cross-functional teams with their collaboration and communication to reduce critical information loss in today’s digital environment.

Looking ahead

The digital transformation of the financial services sector has rapidly brought the industry into the 21st century. New technologies have enabled financial services organizations to put the customer experience at the center of the industry. As information is collected in real time with every consumer transaction, data gets more complex, but also more usable. It is up to an organization’s leadership to establish a culture where cross-functional teams can flourish. Cross-functional teams that collaborate and communicate efficiently are better positioned to innovate and bring cutting-edge and consumer-centric products into the hands of consumers faster than ever before while keeping information loss to a minimum.

About the Author:

Gaurav Rathi is a strategic product leader with more than 16 years of experience in delivering world-class digital products in B2B SaaS/DaaS models for Fortune 100 companies. An expert with a demonstrated history of working with UX and engineering teams to build, digital transformation and continuously improve digital products across a broad range of industries including asset management, custody cash management, investment banking, capital markets, payments, and transaction banking. Gaurav holds a Bachelor’s of Technology degree in computer science from Uttar Pradesh Technical University, India. For more information, contact gaurav.rathi@outlook.com.