By Srinivas Rao, EVP and Chief Business Officer, LTI
There hasn’t been a single industry sector, region or individual who has not been impacted by Covid-19. And whilst we have come a long way since the coronavirus was first discovered, the uncertainty from Covid-19 is going to remain prevalent for the foreseeable future.
Most financial services firms have remained resilient and have adapted well to the new world. They have demonstrated agility by stepping up digitisation efforts and adopting new ways of working. They are turning their experience to their advantage, building capabilities and a workforce capable of succeeding in the new reality.
My recent interactions with financial service leaders and industry analysts suggest that the leading firms are now focusing on several key initiatives to plan their path to recovery:
Accelerated digital adoption
For financial services firms, digital transformation is not new. They have been progressively transforming for several years; however, the pandemic has drastically accelerated the need to change. As per one McKinsey report, on average, digital offerings have leapfrogged seven years of progress in a matter of months. The future of these firms is being shaped by the rapid development and adoption of technologies such as Cloud, Cognitive and Robotics Process Automation (RPA), Artificial Intelligence (AI) and Machine Learning (ML), Blockchain and the Internet of Things (IoT). After years of focusing on the technologies’ value as cheaper and faster alternatives, bank leaders are considering how they can use technologies such as Cloud to drive business innovation, unleash new ways of working, enhance security, and to optimise the organisation.
New ways of working driven by Cloud based digital tools
Banks generally managed the rapid and broad-based transition to remote working highly effectively. According to the PwC workforce of the future survey 46% of financial services employees say their productivity has increased since the pandemic. There will be no rush to return to offices. Therefore, a hybrid model of remote and office-based work will require a thoughtful upskilling strategy focused on adopting digital tools and new ways of working to support productivity, collaboration, and innovation in a virtual world. To maximize the efficiency of their workforces, leaders will increasingly need to adopt good remote practices that engage their teams, focus on outcomes and results (versus inputs), and encourage the adoption of digital tools.
Improving risk management, security, and agility
The leading financial services firms are taking steps today to improve their ability to deal with sudden shocks and unexpected risks in the future. The effects of Covid-19 were so swift, broad-based and interconnected, that banks’ risk models could not adequately support them. Factors and considerations behind these models therefore had to be rapidly reviewed. Availability and quality of data will need to be improved across the risk function and with related functions such as finance. Advanced data analytical capabilities will be critical, including cloud-based AI and predictive modelling techniques combining internal and external data to give a truly rounded view. In a more digital environment, maintaining and continually updating cyber defences will be a pre-requisite. Banks will also need to ensure that they have robust mechanisms in place for monitoring compliance and will need to adapt their internal control mechanisms to handle a significant number of their workforce working remotely.
Workforce of the future: skills realignment
According to a 2019 Ceridian research study, 93% of financial services executives surveyed said their organisations were experiencing some degree of a skills gap. And with the pace of change accelerating because of the pandemic, understanding which skills are needed and how to acquire them is now a moving target. Most banks expect much of their global workforce to be permanently adopting hybrid working model which will pose new challenges in training and re-skilling workforce. Adoption of online training facilities, collaboration, and continuous innovation will be key to keeping the staff engaged and motivated. Employee welfare and mental health aspects will also play a bigger part than ever before.
Corporate Social Responsibility
As economies and firms look towards recovery, the need for an increased focus on environmental, social and governance considerations are obvious. There are lots of examples of firms going the extra mile to look after their stakeholders’ interest: banks giving mortgage holidays to their customers, supermarkets dedicating shopping hours to the elderly and health service workers, beverage companies switching to producing hand sanitiser, food companies donating to food banks. All kinds of companies have been enabling flexible working, offering full pay to workers and other means of supporting their workforce that go above and beyond what is required by law. These efforts will need to be institutionalised and structured programs developed to continue the efforts both during and after the pandemic.
The trends accelerated amidst the pandemic are now shaping the new world. Covid-19 has reinforced the importance of investment in building a resilient, versus efficient-only, workforce for the future. Embracing digital is no longer an option. This is the era of the ‘Great Restructuring’ as every aspect of our life and work is experiencing a change. Organisations now have a choice of returning to the post-covid world that is merely an improved version of their past performance or building a sustainable version for tomorrow. For the evolution of workforce, technology is at the heart of it. And the leaders have made their choice.