Coronavirus will accelerate adoption of digital banking

By Jonathan Power, Managing Director, UKI & FST, Temenos 

COVID-19 continues to have a profound human impact. Governmental responses to it have led to a wide range of knock-on consequences that will have major permanent ramifications for business sectors, including banking.

One of the most notable consequences we are seeing is the surge in digital engagements. Former bystanders of digital banking services have adjusted to using apps for the first time as their local branches closed during lockdown. COVID-19 has driven a rise in the use of fintech apps including a remarkable 72% increase seen in Europe by deVere Group[1].

Banks have endured much greater pressure on their workforces in recent weeks and months. Demand for non-standard requests have increased significantly as customers try to change terms of loans or mortgages, or access savings that are usually restricted.

As with other industries, banks have had to ensure business continuity and seamless business operations while dealing with staff working remotely and reduced staffing levels as employees fall ill or face travel restrictions.

The implications of COVID-19 are not just short term – the crisis has highlighted numerous, long-term challenges for banks.

They need to ensure their digital platforms are agile enough to cope with spikes in customer demand. They need to deliver digital services in a way that gives customers the level of user-friendly experience, personalization and integration between channels they have come to expect. They need to change existing products to cater to new customer needs such as payment holidays and loan restructuring as well as rapidly launch new products to address government initiatives aimed at supporting small businesses and financially vulnerable individuals.

Banks will also need to adapt to the likelihood of a much greater acceptance and desire from staff for remote working and digital communications in the wake of the pandemic. They need to ensure that their banking platforms are resilient and secure enough for both their customers and staff to use.

Finally, banks need to make sure they can continue to provide uninterrupted service through unexpected events in the future.

Banks will need modern digital banking platforms to communicate and respond to customers’ needs instantly. They will need scalable, resilient systems to move seamlessly to remote working, without impacting productivity.

The technology exists to enable banks to do these things.

The latest Explainable AI models, which are transparent in their automated decision-making and infinitely more trustworthy than their predecessors, are a vital tool for banks that need to onboard, perform eligibility checks and rapidly process loans in this climate.

As employees remain stretched, having to cope with illness and childcare, AI can increase efficiency and automation to ensure business continuity, while freeing up man hours to focus on mission critical tasks. Research from the Economist Intelligence Unit carried out during Covid-19 found that 77% of global bank executives believe that unlocking value from AI will be a key differentiator between winning and losing banks.

Cloud technology is another example. Using cloud technologies banks can scale fast based on demand and ensure business resilience and security.

Many banks have been talking about digital transformation for years, but for many progress has not been fast. A recent report[2] from Forrester suggests that while 61% cent of global financial services firms are executing a digital transformation program, only 14% believe they have the right technology infrastructure and applications in place to deliver great and differentiating customer experience.

In the short-term, banks may be risk-averse and delay some digital transformation projects, but the current emergency has shown even more starkly that banks which fail to innovate and adapt will be left behind.

Digital transformation is a fundamental, long-term strategic imperative. Banks have a responsibility to operate 100% digitally while delivering the highest levels of customer experience. COVID-19 has highlighted even more clearly that if they don’t innovate and adapt to the digital world, they will not only fail their customers – they will fail to exist.

[1] https://www.forbes.com/sites/simonchandler/2020/03/30/coronavirus-drives-72-rise-in-use-of-fintech-apps/#76890e6566ed

[2] The Evolution Of Digital Banking Platform Architecture, Jost Hoppermann, Forrester, 6/4/20