How Financial Institutions can better serve themselves, and their customers in unprecedented times

By Arun Baid, Global Delivery Head for BFSI, Cognizant

The coronavirus pandemic has led to seismic shifts in industry priorities. The post-COVID world will be a highly virtual and personal world. The “shift to digital” has accelerated and all industries are being digitally transformed. Financial institutions (FIs) across the globe continue to deal with the fallout of the pandemic. Changes in consumer behaviour have left FIs scrambling to adapt to the new needs of their customers. This is leading to the adoption of more agile IT for quicker development of new products and services and investment in the right tools to enable remote working. FI business leaders are becoming more proactive than reactive. Here are some areas they can look out for.

Make the right investment decisions

One of the first priorities for many FIs will be compensating for declining revenues. Even in Singapore, where the financial services sector posted strong growth for the first half of the year, the Monetary Authority of Singapore expects a certain degree of job impact moving into the second half of 2020. To balance out increasing efficiency ratios, FIs will have to streamline costs and adopt more agile modes of operation that allow them to cater to a highly variable volume of customers. They could, for example:

• Re-examine ongoing discretionary projects to identify and focus on the ones that can immediately improve customer journeys. For instance, fast-tracking an initiative that has the goal of eliminating branch visits for certain customer processes or interactions.
• Review cost management across the business. Cost drivers should be reassessed to determine if they still warrant investment post-COVID-19, and what else should be prioritised over them.
• Streamline working from home (WFH). Beyond having the base infrastructure to enable it, FIs need to think about how WFH capabilities can be further improved to boost productivity — quicker access to crucial applications and systems, improved response times, and so on.

With their core functionalities stabilised, FIs can then start thinking about the long term — revamping systems, services, and processes with the goal of remote, autonomous banking. They could:

• Forget omnichannel, think wholly digital. Quality of digital interaction will become a key differentiator for FIs; organisations need to start thinking about redefining chatbots, customer help lines, sales channels, and the like.
• Offer the right tools for the right jobs. Whatever payment processes or investment options are not yet digital, should be digital — FIs must start developing more extensive robo-advisory applications, automated spending management tools, and others.

Safety from more than just the virus

It is no coincidence that security breaches have seen an uptick since the outbreak began. Just recently, Singapore’s Personal Data Protection Commission fined three organisations for not securing personal data. While getting the ball rolling with their digital transitions is important, FIs must also ensure that they meet standards and put in place the right infrastructure to fully protect their customers. To begin with, they should:

• Implement safety measures in branches such as physical barriers, sanitisation systems for cash, and appointment-based visits
• Apply advanced security applications and protocols for WFH situations, and invest in training employees on how to better protect the data they have to handle
• Work towards the goal of improving customer experience and safety outside the branch, so they no longer have to spend time inside a branch

Think people first

COVID-19 has impacted everyone differently. Each consumer segment is developing new opinions on how they should save, spend or invest their money, and their financial services needs are bound to change accordingly.

FIs must take the time to connect with their customers on how they have been affected by the pandemic, and figure out how they can meet the new expectations of their users. Whether this means rethinking forbearance procedures, loan structures, interest rates or anything else, adopting greater flexibility in product design and pricing mechanisms will be key in customer retention.

Planning for the long haul

The transition to digital will provide the right foundation for FIs to reimagine how they can meet fast-changing consumer needs, and will play a fundamental role in enabling them to thrive during these unprecedented times.

Beyond this structural transformation, however, FIs must also consider the changing role that they will come to play for a community still reeling from the effects of an economic crisis. They will be the deciding factor for whether enterprises get to pick up and reset. They will determine whether customers and their families remain financially solvent.

By considering how they can give back and provide the right instruments and guidance to customers on how to weather out the COVID-storm, FIs will not only develop a new level of trust with their customers, but a greater understanding on how to cope with any given crisis, now and in the future.