The financial sector has successfully navigated the immediate pressures of the COVID-19 crisis. As thoughts turn to a world beyond the immediate crisis, Mike Hampson, CEO of Bishopsgate Financial outlines how banks are in a unique position to seize the opportunities going forward.
The pandemic’s impact on individuals and organisations within the banking sector is ever-evolving. It has been predicted that the economic environment post-coronavirus is likely to be tough, as the industry continues to operate and adapt. A Deloitte report titled ‘Maintaining Balance Sheet Resilience: COVID-19 implications for the banking and capital markets sector’, contends that banks are now better prepared to adjust to these intensely challenging conditions than they were at the start of the 2008 financial crisis. Banks can be rightly proud of themselves for demonstrating unprecedented agility and resilience. But further benefits are now achievable thanks to the rapid progress made in the last twelve months. Game-changing tools and capabilities are now in place to build a resilient post-pandemic future.
New tools and capabilities
Just as wars accelerate innovation, the pandemic has fuelled a shift in the way we live and work. The dramatic increase in non-cash transactions, and rapid adoption of digital and mobile banking by customers has been well managed by banks, thanks to their smart decisions around talent and technology investments. For example, Citibank saw an 84-percent increase in daily mobile check deposits and a tenfold increase in customer use of Apple Pay in May. Further still, data from an industry survey conducted by digital document-signing company Lightico show that 55 percent of customers plan to visit bank branches less often, and 26 percent will avoid face-to-face banking entirely.
Remote working also brings an opportunity for financial services companies to access new talent pools, improve flexible working, address the work-life balance (if done right), and increase diversity.
Digital transition opens many doors
Now is the time to keep tech-powered momentum going, and enable these new opportunities to come to fruition. This is an exciting time to strive for smarter, more secure use of financial data, smoother regulatory compliance, faster reactions to customer needs, and greater productivity in the workforce. These are all potential wins if digitisation continues to be a focus. Yet, progress should not be made at the expense of some sections of society. It’s also important to be aware of the banking needs of the vulnerable and un-banked, who could fall further behind.
Digital collaboration tools for long-term flexible working
It’s not just banks’ customers whose needs and expectations have been changed by the pandemic – so have those of their employees. One of the biggest technology changes has been the switch to home working. Banking executives we spoke to for our Change Perspective 2021 report, felt location-independent working is becoming the new normal. This will need further investment in technology infrastructure and bandwidth. Reliable local internet access and a collaborative set of tools across a robust communications structure are key. Not to mention secure cloud technology for staff to access for cross-functional and real-time insights.
RegTech driven compliance
No doubt, banks are re-imagining their operations, processes, and solutions in this technology-driven world. Regulatory technology is helping banks automate their internal policy management and processes for compliance. As this advances, fintech players may now face disruption themselves. Traditionally one of their edges has been speed and agility in developing products, onboarding, and servicing clients.
Now as they become larger, they will attract more attention from authorities; especially if they try and cut corners in the name of making life easier for their customers. It’s therefore high time for fintechs to ensure that they build and maintain an appropriate compliance culture whilst handling risks.
This is an exciting time of opportunity and change. Banks need to grasp it now and begin to make clear strategic bets for the future.