The financial business has undergone significant regulatory change over the past few years and is constantly and rapidly developing further. Open banking (based on directive PSD2) has unlocked bank-held customer transaction data, as it enables consumers to access their bank account(s) through a third-party service provider. This thesis studies a Finnish financial organization, which is implementing an enterprise agile operating model to keep up with up the changing regulatory and technological environment. The three improvement aims for the transformation were improved employee experience, customer experience, and operational efficiency.

The case company, formerly hierarchical and rigid, is shifting to an agile operating model and transforming its management control system (MCS) in the process. The changes within the MCS package and the individual management control elements are likely to produce competing and/or contradictory demands for the personnel. These demands and their interactions cause frictions that are called management control tensions. The thesis studies how the implementation of the agile approach causes management control tension emergence within the financial organization and one business unit. The implementati0n both modifies and replaces the traditionally coercive management controls, and the resulting tensions and their management are studied in the thesis.

Due to the agile approach, the focus of management controls shifted from controlling individuals to controlling teams, decentralizing decision-making, and lowering the hierarchy of the organization. The case study results suggested that the emerging tensions were the result of three distinct factors. The identified factors were: 1. the decentralization of decision power, responsibility & accountability structures; 2. misalignments between objectives, activities & measurements; and 3. fragmented information & lack of resources hindering internal transparency. These factors cause tensions due to the illusory and obstructed empowerment scenarios that they foster. The tensions become visible through the feelings of frustration, futility, and powerlessness among the employees.

The management control tensions are also being managed in the case company through attempts to remove the obstacles of employees’ authentic empowerment. These tension management initiatives include employee training, encouragement towards self-management, emphasizing internal transparency, and development of the target setting process. Overall, it seems that by emphasizing on cultural controls and abundant communication, tensions caused by the changing management controls can be actively balanced. However, this requires active participation from both managers and employees.

The thesis is subject to limitations caused by the nature of the single case study. Further research on tensions could utilize quantitative methods to acquire an improved generalizability.