“We need banking but we don`t need banks anymore. Do you think someday we can open bank account or ask for loan without physically having to come to the bank?”
The novel corona virus (COVID-19) has seen banks accelerate their digital transformation plans, condensing them from 5yrs strategic plans to year-long projects and into a matter of weeks’ activity. In fact, some research in certain quarters showed that the pandemic increased organizations` urgency for digital transformation with over 90% of all respondents admitting that changes are now needed for their business to survive in a post-crisis world.
As the pandemic slows or the dust settles going into a new year, what are the plans for financial institutions? Are there any gaps emerging in their technological progress? Do legacy platforms continue to be hindrances, or has the pandemic uncovered new areas of focus? At the centre of this, banking technology is not as efficient as is could be, and organizational structures and processes are not optimized as a result. With planning focused on what is next for 2021, there are some clear areas where banks should focus their immediate attention.
- Institutions must invest in robust systems:
COVID-19 has revealed many situations where banks wanted to carry out a process or offer a product or service digitally, but they simply didn’t have modern enough technology in place to do so. Looking ahead to 2021, even in an investment constrained environment, they will want to invest to improve and protect. To upgrade processes and offerings online will require a clear focus on the areas requiring risk mitigation, service improvement, revenue protection and with high cost improvement opportunities.
- Increase the level of automation:
Many banks were under extreme pressure when opening up new digital channels at the beginning of COVID-19 and this would have forced them banks to take the quickest route possible. This would have led to some manual parallel processes being put in place, as well as quick-fix digital processes set up with a lot of logic built into that channel. Therefore, banks need to dedicate sufficient time to cleaning up their automated processes to ensure they work properly. They must also factor in any recent policy changes made during the pandemic especially with contactless banking with regards to protocols. These need to be reviewed and updated accordingly and ensure sufficient auditability and traceability is in place.
- Disseminated working needs improvement:
The majority of banks have found it challenging having the bulk of their employees working from home: they couldn’t use outsourced operations, training was a nightmare to carry out remotely, people didn’t have the right tools available to get things done in a quick and efficient way and management was not used to a virtual environment. This was particularly problematic given the strain that customers themselves were experiencing during the outbreak, and the huge numbers who were seeking help from financial institutions. In terms of remote working, COVID-19 was a huge wake up call for banks and will continue to spur them on to improve operational resilience to do things remotely and in a distributed manner. This means having systems that can dynamically re-route work, change prioritizations and service levels, flex what is easily automated to better manage service levels. It also means having solutions which help new team members get up to speed quickly and maximize cross-skilling options.
- Performance monitoring of employees be reviewed positively:
Where this has often been viewed in the past as a negative activity, tracking staff from a productivity point of view is incredibly beneficial and valuable. What is required is a dramatic shift in mindset to think about how this technology can really benefit employees so that it is welcomed with open arms instead of suspicion.
Banks having a thorough overview of what is happening inside their organization has myriad benefits, such as identifying why some people are not productive and how to fix it, what systems have delays or lags, how best to prioritize and organize work and teams etc. The primary use case for this technology is not for security reasons and keeping tabs on their staff, but to help manage teams and improve services. Yes, monitoring will be seen and used as a way to look at compliance within processes, but it has far more impact on customer service levels and outcomes than many consider.
- The Fintech collaboration must be a necessity:
Fintech, technology-based financial services, provides several banking services that can compete with banks. Fintech is also regarded as a disruptor to banking. Some fintech firms have succeeded in acquiring customers. Some banking customers have also migrated from banking to fintech. Yet the capacity of fintech to disrupt banking is limited. Fintech is an infant industry and needs considerable time to prove that its services are as good and secure as those of banks. Regulations limit the nominal value of transactions through fintech platforms for security and customer protection reasons.
Banks can fight back and try to excel in this competition by adopting open banking using Application Programming Interface (API) technology, digital banking and other strategies. Future financial customers will be tech savvy and keen to have simple, fast and cheap services. They are millennials who are eager to have more personalized services. They feel that they have to be understood by financial institutions, not the other way around. The reason for the establishment of fintech is the notion that the intermediary function is expensive lacks the capacity to serve customers’ needs. The products and services issued by financial institutions are mass products, except for personal banking, which serves high-net worth individuals. Technology can spoil regular customers with relatively low costs. If banks fail to see fintech collaboration as a necessity, they will lose their clients to Fintech firms in the long-term and this surely can negatively impact the bottom line.
COVID-19 has become a disruptor of strategic plans of many banking institutions but it has also served as a wakeup call to institutions that failed to envisage the future as being digital. There has been a rude awakening and banks should have no excuse in moving towards digitalization if they have not done so already. Those still taking the step have no option but to double up with a “phygital” (physical plus digital) journey into the new year.
About the Writer:
Ebenezer ASUMANG, CGIA worked extensively in mainstream Banking & NBFIs. He is a Chartered member of the CGIA Institute, USA, a Google Certified Digital Marketer and an Author.
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