Banks and the wider financial services sector are facing multiple challenges from the ongoing global impact of COVID-19. Along with unprecedented numbers of customers contacting them with questions and concerns, they are also having to cope with economic uncertainty, breakdown on known risk management models, branch closures and increasing strain on their phone and digital support channels.
Institutions need to not only address these immediate points, but concurrently maintain enough flexibility to drive growth post the current crisis. The good news is that there are indications that Banks are better prepared for the current economic crisis than they were during the 2008 recession. By drawing on learnings from the current situation and using them to redesign their digital strategy, they can improve customer relationships and build greater operational resilience in the long-term.
Enhance relationships with your customers
Supporting customers during this critical phase will be the key to long term success. Customer concerns will continue to evolve as we enter the post-COVID-19 era. Banks should proactively address these with enhanced digital offerings, proactive communication and care.
Support vulnerable clients: Customers facing financial difficulties find it difficult to make payments on time and will be afraid to default on loans or miss mortgage payments. Banks should proactively identify impacted customers, accelerate reach-outs and personalize hardship offers. They should enhance their use of digital channels (mobile apps, SMS, Chat, Online) to enable personalized reach outs of a larger set of customers and encourage communication around financial challenges and offer advice.
Digitize experience: We expect a significant shift to reducing long-term dependence on physical infrastructure. To support their customers through this transition, banks should accelerate the adoption of digital only channels by anticipating needs, streamlining the experience, providing FAQs, chatbots and tutorials to lessen reliance on call centres and branches for services. In the near term, banks should enable scenario analysis and self-service hardship enrolment based on updated risk criteria. There should also be an acceleration in automation of end-to-end digital onboarding, straight-through processing of applications and real-time decisioning to reduce call volumes.
Evaluate and enhance offerings: Closure of retail establishments and travel restrictions have impacted the product value propositions originally envisaged. To increase customer value, banks must re-evaluate and calibrate their existing products to better suit the current climate. This might involve introducing flexible ways for their clients to design products in line with their needs, such as interest and loan duration for lending products. Banks may also want to offer customers the ability to redeem points and miles for a wider range of outcomes, including gift cards, household goods and electronics.
Manage Risk and Create Resilience in Operations
Operational and financial resiliency is bound to remain critical with the economic pressures and societal tensions. Banks must continue to leverage technology and build flexibility in their infrastructure to navigate these challenges.
Assess risk: A dip in the interest rates accompanied by the current volatility in the market may expose banks to market, credit and operational risks, eventually leading to losses. Banks will need to reimagine their credit and collection processes to proactively identify loans that can turn delinquent and implement remedial measures, as well carry out additional stress tests with multiple scenarios related to the impact of COVID-19.
Leverage technology: Many financial institutions are already leveraging technologies such as AI, automation, digital and cloud capabilities to build flexibility and resilience across business processes. This concept of digital self-serve will continue to change the contact center landscape for the industry, from simple website chatbots that answer billing-related enquires to fully automated personal advisors. Automation tools can also provide agent enablement, assisting customer service staff in accessing appropriate answers more quickly.
Build for flexibility: In today’s climate, success depends primarily on the ability to be dynamic and adapt while retaining a clear and focused vision, and banks should build flexibility into their processes, operating models and technology infrastructure to cater to demand changes. We expect to see a movement towards organizational agility; businesses that embrace the agile mindset will undoubtedly cope better with disruption.
Redesign employee engagement for the long term
We have already seen employees not able work from office due to branch and office closures, illness and lockdown, and we expect a hybrid model of co-located and distributed work to prevail long-term. But what does this mean for financial institutions?
Enable distance working: Modern collaboration tools, such as Zoom, Microsoft Teams and Jira provide a platform to enable sharing of information, scheduling, prioritization, as well a range of communication methods for seamless remote collaboration. In addition, there is a need to reassess and amplify the employee experience with applications that provide better user experience combined with improved insights, that can drive better productivity. Alongside expanding their use of these tools, banks will need to establish new metrics to measure efficiency and productivity of the tele-commuting employees.
Security measures: Banks and other financial services institutions have an elevated risk for data breaches, so key considerations for remote employees in the long-term must include data security, fraud, cybersecurity, and privacy, especially safeguarding personally identifiable information.
Over-communicate: It is critical that banks support their workforce through this transition with empathy and compassion. Constant communication is key here; leaders create resilience when they remain honest and empathetic, setting out an explicit list of priorities and expectations which are communicated clearly and consistently. Banks may also reimagine and design experiences based on each employee’s motivations, psychological traits and context to improve engagement.
Given the scale and the magnitude of the slowdown, banks need to take measures across multiple dimensions to account for the element of uncertainty. By engaging clients and enhancing their value proposition, strengthening workforce and internal operations, and taking measures to ensure financial stability, banks can drive growth through both an economic downturn and the eventual recovery.
Associate Partner, Financial Services and Insurance
Manishi has over 20 years’ experience and is currently a practice leader for Banking, Payments and Cards. He has helped clients define business strategy, improve processes, consolidate operations, reduce costs and implement large business transformation programs. Manishi has an MBA from the Indian Institute of Management and resides in the New York City area.
Managing Partner, Financial Services and Insurance
As Managing partner- Financial Services and Insurance (FSI), Rajesh leads the global FSI practice for Infosys Consulting. Rajesh has been with Infosys consulting for 17 years and has played a varied set of leadership roles. Rajesh has helped drive large transformation programs across various themes, regulatory compliance, commercial banking, wealth and asset management with clients like Citigroup, Wells Fargo, American Express, Fidelity, Goldman Sachs, UBS and Allstate, to name a few. Some of his industry-leading thought leadership is featured on our Insights digital platform. These include “Capturing next wave of growth in banking: a post COVID-19 roadmap”, “Reinventing Wealth Management in the Digital Age” and “Reimagining Investment Research”. Rajesh is an alumnus of Jamnalal Bajaj Institute of Management, Mumbai and Stanford Business School and is based out of our New York office.