COVID-19 and UK Banks –Responding and Adjusting to Seismic Change

By Jonathan Shawcross, MD Banking, Gobeyond Partners. 

COVID-19, and the associated impacts which come with this crisis, have hit the UK banking industry incredibly hard.

The banks are encountering loss of their own people to sickness, loss of their overseas operations to rapid lockdowns, customers desperate to ensure their financial security, Government instructions to give payment holidays, new business lending schemes to implement, branches to remain open despite the lockdown, reduction in interest rates and therefore profitability, and much more… the list goes on.

Having led major incident management for two of the UK’s big four banks, I am no stranger to understanding just how challenging it can be to mobilise large financial organisations in response to major IT failures, financial markets collapse, riots and even terrorist attacks. However, the events of the past few weeks are truly unprecedented. In fact, I think we can even go as far to say that COVID-19 has taken all these previously mentioned incidents and combined them into one ‘meta-crisis’ in terms of the severity of the situation.

Responses to COVID-19 are complex and hard to implement at pace – likewise these responses form another very long list. They include new IT solutions for remote working and new equipment to support this, new processes to implement, new risks to assess and mitigate, financial forecasts and capital requirements to be reassessed, worried investors to manage, scaling operations to meet customer demand at short notice, staff to communicate with and to safeguard, urgent and comforting messaging to be delivered to customers at scale, additional security measures to implement, cash to continue flowing to branches and ATMs, and of course customers and clients all over the world to support through major financial distress.

This crisis represents unique and particular challenges as it is both complex, continuously evolving, and likely to be long lasting. However, history tells us that major incidents which have had similar characteristics, have usually moved through distinct phases from a business perspective. Each of these phases requires its own response; but what are these for banking in the current crisis?

1. Rapid Crisis Response

 This phase is about avoiding or mitigating customer panic by changing your service delivery model rapidly. We’re a few weeks into this phase, with many organisations focused on enabling customer requests and contacts to be handled effectively through at least a ‘minimum viable service’. Many are promoting increased use of self-serve digital channels and/or automation for both sales and service to reduce the sheer volume into direct contact. The dichotomy here is that in stressed times such as these, sometimes a human voice is what people really need to help them remain calm.  As such, the principal response has been to enable remote working capability for customer operations teams, with the initial shock highlighting the wide variety of capability and robust continuity arrangements which exist. Some banks are still trying to find adequate solutions – which doubtless will provide multiple agenda points in future incident reviews over the coming months.

1. Take back control 

Government advice tells us that the COVID-19 crisis will start to peak in the UK in about two to three weeks’ time (mid-late April). This will mean higher levels of absence and therefore a challenge to sustain even home-workers at the levels required to meet customer demand. Banks must prepare now for this and have a ‘Plan B’ in place. This may include improving online services; reducing available products (as we have already seen with some mortgage products); increased use of messaging or automation within contact channels or perhaps better still, bringing in additional remote-workers immediately to prepare for this spike in absence. These resources could be supplied directly or through partners.

1. Business as unusual 

A full set of resources and a simplified and more automated offering will be one thing, but medium to longer term working from home will see a dip in productivity and morale amongst workers who are still being asked to directly support customers. It will be key that there is a plan now for how the banks will lead, manage and motivate a dispersed workforce over a potentially extended period of remote working, when this will be a highly unusual and challenging environment for them.  It will require different management tools, rhythms and leadership approaches to be successful. The trick here is to think about where to place any investment, given that you either need to see a relatively short term return, or it needs to be something you can incorporate into your ‘new normal’ once the tide starts to turn on Covid-19.

1. Transition to new normal 

Bringing the organisation and customer service back into BAU brings with it several considerations. This will include the re-introduction of services paused during the crisis;  consideration also for a longer-term remote working or outsourcing solution as a feature of the ‘new normal’ – what worked about the new way of working and how could that add value to customers and to firms going forward? How will transformation programmes restart? In an environment where the profitability of the banks will have been severely hit, what new initiatives will be required to more rapidly step-change both improved customer service and reduced cost?

1. Prepare for next crisis

COVID-19 has taken the world by surprise and been a sobering moment for the economy and our society, as well as business at large. Many organisations are going to need to think very differently about operational resilience and business continuity planning.

Importantly the banks, now more than ever, will need to focus hard on empathising and coping with customer fears. These will be urgent needs of customers to keep their homes and feed their families. How organisations act now will have a long-lasting impact on consumer trust and loyalty.

All of this is a big ask, yet the sympathy from customers and Governments alike is unfortunately thin on the ground. Quite frankly the banks can’t afford to get this wrong – both in terms of their own reputation with their customers, but also to prove the ability of the UK as a collective, to financially negotiate this crisis.