Why digital transformation and COVID-19 adoption has changed financial services




Management Consulting | Technology Advisory | Outsourcing                                                     


The Financial Services industry is currently in the midst of profound transformation as it embraces the ‘next normal’ phase of digital transformation. But, are we in danger of embracing digital without really understanding the consequences?


In the past decade, a future with more people using technology has become a real possibility. Digital transformation has seen to the major shift across the world, with emerging technologies and adaption to new applications. However, warnings are sounding about the driving forces behind this digital shift over time. With the recent COVID-19 pandemic shock, the acceleration of digital transformation became more eminent.

In a matter of weeks, the COVID outbreak forced radical changes in customer behaviour, moved significant portions of the economy online, and increased customers’ comfort and willingness to engage digitally. People now adapt to conduct their lives using technology for remote work, mobile banking, card-less and cashless payments, online shopping, home schooling among others; and in terms of convenience, most of us are winners. But, are we in danger of embracing the ‘new normal’ of digital without really understanding the consequences?


Businesses and Financial Services technology is currently in the midst of profound transformation, as pressure has increased across operations and supply-chains. With a decline in demand for goods and services due to reduced disposable income in the population, CIOs and their teams prepare to embrace the next major phase of digital transformation. The challenge they face is significant: in a competitive environment of rising cost pressures, where rapid action and response is imperative, financial institutions must modernise their technology function to support expanded digitisation of both the front and back ends of their businesses.


Furthermore, the current COVID-19 shock has put immense pressure on technology capabilities (e.g. remote working, new cyber-security threats, increased online shopping, card-less and cashless payments error alerts, etc.) and requires CIOs to anticipate and prepare for the ‘next normal’ with an accelerated shift to digital channels. However, poorer communities still like to pay with cash as the population is showing what economists would call a higher ‘liquidity preference’ – they’re holding onto their cash in a time of uncertainty. Even though cash use has declined slightly during the pandemic shock as consumers accelerate the shift to electronic payments, the poor are more likely to still use cash – exacerbating the ‘digital divide’. And in times of crisis, everyone wants a fistful of cash for comfort and security.

Most major financial institutions are well aware of the imperative for action, and hence have embarked on the necessary transformation. However, this is still in its early days – based on experience, most are only at the beginning of their journey. And in addition to the current pressures, many are facing challenges in terms of reduced revenues and funding, complexity, and talent availability.

Businesses must therefore reimagine the role of technology as an innovation partner; reinvent business models and technology delivery to drive change in productivity and speed by building flexible, secure enablers for supply; and explore new customer channels.


The key enablers for digital transformation are inclined to customer-centricity, organisational foundations, talent and changed culture for an innovation mindset. Successful transformation strategy and execution capabilities would rely on external collaboration and proactive engagement.

As mentioned, COVID-19 has brought a fundamental shift in business operations – including forced adoption of online, mobile, and call centres; and overnight virtualisation of workforce, workplace, ways of working and managing teams remotely…a tipping point for digital and contactless payments, with an evolution of underlying market structure and economics.

Data-driven decision-making will be used to help guide every enterprise through challenging times, transforming core missions such as last-mile delivery, supply-chain management, product development, customer demand analysis, raw materials sourcing and logistics, data and information governance. These are the building blocks which enterprises will need to survive in this new age. It has been forecast that over 150 billion devices will be connected across the globe by 2025, mostly able to gather and create data in real time.

The scale of the COVID-19 crisis shows the need; real-time predictive analytics may help mitigate the consequences of threats to supply-chains. Therefore, in difficult environments poor decisions will have financial costs. Businesses must accurately predict the products and services needed while developing diversified supply-chains. They will also need to keep abreast of rapidly changing economic and regulatory policies.

The current crisis will also lead enterprises to further diversify their ‘just-in-time’ manufacturing operations, but it will also require them to develop fast and actual reporting systems across the chain. This refers to data-driven decision-making and other needs: such as those around data regulation, storage; network provision; machine learning; analytics processing and more. Integration of technology with some businesses, especially in the informal sector, may be hard or slow due to the nature of their operations and limited capacity to use different technology tools; for example, use of cloud-based services, computers, and smartphones among others. Some businesses are also sceptical of uncertainties associated with technology – for example system hacking, poor network coverage and cybersecurity challenges.

The business of the future will supply a product or service that is needed by customers in an environment defined by increased personal surveillance and intermittent business interruption, as lockdowns to control COVID-19 infection clusters are applied. To effectively serve their markets, enterprises will require real-time data on temporary or permanent market interruptions. This is going to transform working habits and remote working; use of managed office and co-working spaces will predominate as enterprises seek flexibility to manage uncertainty and sudden change. Training, managing and team-building will become primarily electronic; though, ironically, social and away-day events will also become more important as enterprises work to foster feelings of community within their businesses.

Since network interoperability and the need to avoid network congestion will be vital, enterprise users will therefore require near-perfect network provision – while network providers will also need to ensure their maintenance systems are sufficiently robust to handle intermittent lockdowns. This will inevitably lead to investing in self-diagnosed, automated and preventive-maintenance solutions.



End Notes:

  • International Data Corporation, (IDC) June 2019 figure estimates and forecasts based on “Worldwide smartphone forecast update, 2019–2023”.
  • Stalworth Consulting Group (SCG) estimates based on various sources, including:

– Application (App) Annie, “The state of mobile device 2020”.

– McKinsey & Company, “Next-generation Technology Transformation in Financial Services 2020”.

  • International Data Corporation (IDC) forecasts smartphone sales 2020/21.
  • Based on this CAGR, the smartphone average selling price (ASP) 2020/21.
  • “Worldwide smartphone forecast update, 2019–2023” for smartphone and devices units International Data Corporation (IDC), June 2020.
  • “Worldwide smartphone forecast update, 2018–2022”, for average selling price (ASPs), International Data Corporation (IDC), June 2019.



About the author

Stalworth Consulting Group, LLC is a leader in technology, media and telecommunications (TMT) and financial services strategy consulting, offering digital transformation strategy, technology advisory and inclusive financial services.


Stalworth Consulting Group, LLC (also referred to as SCG) is a limited liability company incorporated in Uganda with its statutory seat in Kampala as a legal and independent entity. SCG is the trading name for Stalworth Consulting Group LLC, a management and strategy consulting firm focused on digital economy, emerging technology advisory and inclusive financial services.

Please see www.scg.ug to learn more about our firm and our clients.

Copyright © 2020 Stalworth Consulting Group, LLC. All rights reserved.



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