By Elina Mattila, Executive Director at Mobey Forum
Throughout the Covid-19 pandemic, banks have played an integral role as the distribution mechanism for many governmental intervention and support strategies rolled out to the general public. As we look to the months ahead, Mobey Forum’s Executive Director, Elina Mattila, discusses how banks can continue to aid the recovery of the global economy in ways which go beyond traditional methods of financial support.
Over the past 12 months, society has been forced to digitalise many of its core functions at an unexpectedly fast pace. Today and beyond, there is a growing expectation for these new digital services to continue and improve. This expectation is particularly prominent in the banking industry, which rolled out an expanded range of digital services during the early stages of the pandemic including chatbots, virtual appointments, enhanced features for mobile banking and streamlined authentication processes for customer service.
While broader access to comprehensive financial services remains a priority, there is an opportunity for banks to now take this a step further, by providing secure access to other vital services too.
Leading the development of a trusted approach to digital ID
The development of high assurance digital ID systems is one such example. The introduction of regional lockdowns during the pandemic highlighted the need for citizens to be able to prove their identity via digital methods, and to be able to do so with a high level of assurance on its security and reliability. A prominent example emerged in the UK when NHS workers were granted priority access to supermarkets by displaying their badges, which led to an increase in targeted muggings. A robust form of digital identity would make it easier for citizens to prove their identity in relation to their employment, and also access other key services such as government benefits, healthcare and education.
Research from Mobey Forum confirmed that digital identity schemes can play an important role in allowing life to continue online. With their long history of managing sensitive data, banks are uniquely placed to lead the way with a centralised digital identity model; alleviating many common fears around the collection, tracking and sharing of personal data, and empowering customers to securely access, and seamlessly manage, digital services from anywhere. This includes identity services that extend beyond the banking and finance industry, for example those used in education or to access medical records in the healthcare sector.
Supporting society with secure and reliable access to digital services
Establishing digital ID services is important in order to support the recovery of our economies in the year ahead, providing it is accessible to all members of society. The rapid acceleration of technology during the pandemic has caused an irreversible shift in consumer behaviour and expectations. We saw many access digital services and online banking for the first time, and digital appointments have increasingly replaced physical interactions.
With the closure of more retail branches expected in 2021, banks are in an optimal position to support access to digital services. There is also an emerging role for banks to support the community through digital literacy initiatives to ensure all demographics are able to manage their finances through digital channels. Banks have a responsibility to conduct robust testing of all online banking services to ensure accessibility and ensure no customers are left behind.
Unlocking new value through APIs and digital payments
The pandemic prompted mortgage payment holidays, interest-free overdrafts and reduced penalties, which were rolled out at a speed and scale we have never seen before. However, this all has an impact on the banks’ bottom line. While the outlook for 2021 promises opportunities for recovery, recent industry reports suggest that banks may face challenges on the road ahead. Loan losses due to the pandemic, and increasing taxation from governments that must address widening budget deficits, could place pressure on banks’ budgets.
The creation of new digital services therefore presents a golden opportunity for banks and business. For example, the introduction of PSD2 was the first push for banks to move towards API-driven approaches. Many are now looking beyond compliance, and exploring various options for monetising their APIs. Superior interfaces that third parties will pay for, as well premium APIs that are not required to be opened under regulation, are just some of the developments seen so far. Some banks are also exploring opportunities for using APIs internally to reduce operational costs.
Additionally, the acceleration of digital payments and trend towards declining cash usage during the pandemic has given eCommerce a significant boost. Contactless payments have taken over in brick-and-mortar shops and customers are increasingly preferring to shop online, reinforcing the fundamental role that digital will continue to play in our future economies.
Planning for the future
With the ongoing rollout of Covid-19 vaccines, there is increasing hope that society will return to some normality in the not-so-distant future. National lockdowns should begin to ease and restrictions will lighten, yet many of the changes to the financial services landscape are irreversible. Customers have become accustomed to a greater variety of digital and remote services, and the convenience it brings. The most successful banks will be those that are remembered for coming to the aid of their customers during the pandemic, but also those that can continue to meet and exceed expectations for digital in the future too.