Published : 3 years ago, on 19/08/2021

By Ian Bradbury, CTO for financial services at Fujitsu UK & Ireland

Throughout history the financial services sector has been the ship that has weathered the rough seas of global crises.

This resilience can sometimes give the industry a reputation of being resistant to change, a tanker that can be difficult to manoeuvre or change direction. And while the events of last year presented another unprecedented challenge, the sector once again responded.

The pandemic acted as a lightning rod in the seismic shift to digital. While this was a trend which was already happening pre-COVID-19, the introduction of social distancing measures and lockdowns accelerated the shift of payment transactions online.

While the needs of banking customers have remained unchanged for centuries, the way in which those services are delivered totally changed in a very short space of time.

Evolving post-Covid-19

One study suggests as many as 89% of total card payments were contactless in 2020. And it doesn’t stop at payments. Two thirds of banking customers say they plan to convert fully to a digital bank in the future.

This appetite for digital has meant many traditional banks are playing catch-up with the digital-first offerings from the likes of Revolut and Starling. Both of these were already enjoying popularity before the pandemic hit, but this trend has only accelerated further.

The established players must find a way to replicate the levels of functionality these apps offer – particularly if they want to capture the younger generation who have become accustomed to the speed and efficiency they provide.

Similarly, the likes of Revolut and Starling have also created a strong brand identity, which has resonated with the younger demographic, in turn creating trust and loyalty. For instance, Revolut has successfully tapped into paid for services, while Starling has led the bank account switching race.

In response, traditional banks need to enhance their speed, efficiency and branding to compete in the new ‘digital first’ market.

Social responsibility a priority

Since the pandemic, environmental and sustainable banking has also been high on the agenda. As financial organisations strive to provide great customer experiences, the emphasis must also be on how they align their services with customers’ ethical and social beliefs.

More than 9 in 10 consumers believe their views on environmental sustainability has been affected by the pandemic.

This creates an opportunity to position the business as a trusted pillar of society; empty promises on corporate social responsibility are no longer enough. A great example I saw recently was NatWest with its ‘green mortgage’. This offered homebuyers a preferential interest rate on their loan if they bought an energy efficient property.

Undoubtedly, environmental concerns resonate with large proportions of consumers who continue to champion climate change. A major European study found that two out of every three people (64%) do not want to go back to pre-Covid pollution levels.

The financial service sector needs to take these concerns as a top priority, particularly to fulfil demand and attract the socially-conscious, next generation of banking customers.

But they must also be aware of investment ‘greenwashing’ – which essentially pays lip service to the change that is needed. Banks need to be serious about the challenges ahead, the role they will need to play, and being authentic in the action they are taking.

Recently the Green Technical Advisory Group (GTAG) was established to help advise on a framework which will set the bar for investments that can be defined as environmentally sustainable. For any bank looking to change this is a clear place to start.

For me it is clear the sector will once again be that ship to guide others through future storms. But climate change is here right now, so action must be taken quickly.

What does the future hold? 

I believe that we are at a moment of reflection, and that banks can take the lessons learned from the pandemic to set them up for the future.

Among those, there’s a clear need for greater flexibility, showing a more digital-first mindset, and focussing on the customer’s experience, be that in-person or online. The demand for social responsibility, particularly around the environment, is not going away and must be part and parcel of a bank’s offering.

Elsewhere, just like many businesses in service-based sectors are considering the future role of their office, the bank branch is also ripe for transformation and change. This is a great chance to rethink how these spaces can deliver value for customers, as well as devising new innovative offerings – with a focus on customer engagement.

While this is a time of change, it does create the opportunity for laggards to leapfrog if they make the right investment in technology infrastructure and modernisation. I firmly believe the financial service sector will continue to be that steward for society on stormy seas.