The Self-Governing Enterprise: Digital Transformation and the Future of Financial Institutions

The rapid advance of digital technologies along with the availability of unprecedented amounts of granular data enable a reinvention of financial institutions as self-governing enterprises that utilize digital platforms and data as the primary resources basis of value creation. A self-governing enterprise is defined as an autonomous enterprise whose action framework is continuously refined by its stakeholders to comply with a comprehensive set of policies whose observance is verified by a retained third-party certification authority. While these enterprises retain full autonomy of investment, operation, and exit decisions, they address their key externalities a priori through self-governance; the observance of the resulting governance framework is formally verified by a specialized third-party authority in a “compliance-by-design” approach—i.e., before the enterprise starts executing any action.