The end of an analogue era
Prior to COVID-19 banks were able to continue traditional, nostalgic ways of working with their customers avoiding the need to fully digitise their operations. Communication with business customers could be face-to-face with their most prestigious, high net-worth clients or through a combination of paper and digital.
If a customer wished to make a payment or transfer, the ‘old way’ of doing things was available to them. Traditional banks were slow to adopt an end-to-end digital environment because there has never been the necessity to do so.
This was all to change with COVID-19. Banks needed to act as quickly and as seamlessly as possible, to mitigate the risk of losing their most valued customers – and time was not on their side. Lined up were the challenger banks of tomorrow that could quickly migrate customers over to their platforms at the touch of a button.
A series of strategic and tactical manoeuvres were necessary if traditional banks were to survive. The alternative was to become an endangered species or worse, extinct.
Wake up and smell the coffee time
Let it run for as long as it works. A culture ingrained in traditional banking prior to COVID-19, however, a procedure that traditional banks could no longer depend on when the world was shaken by a destructive and deadly virus. Financial institutions needed to wake up and smell the coffee, or risk losing their customers.
Almost overnight, banks and financial institutions made plans to preserve their business reputation that they had worked so hard building. With the inability for employees to access their place of work due to the global lockdown, remote working would strengthen the relationship with the customer. Meanwhile, digital technologies would retain customers from the physical to the digital world.
Still, some institutions are attempting to change their business models at a snail’s pace. IT legacy issues and ‘technology vendor lock-in’ have meant that banks aren’t able to change their operations at the speed they would like to – and this is impacting on the customer’s experience causing digital banking outages.
Meanwhile, the rise of challenger offerings has meant that customers are exploring new ways of facilitating payments and accessing lending. Banks need to ensure they stay competitively priced, assessing a COVID-19 industry average in their pricing analysis.
A post-COVID-19 model to future-proof traditional banking
For banks to survive in a post-COVID-19 world they must review their risk modelling strategies to accommodate the pandemics of the future, rather than falling back to what they know once COVID-19 has been contained.
Banks need to ensure that remote working can be provisioned for effectively, in the event of another pandemic, and need to abandon paper processes all together.
All of this is easier said than done and banks must spend time on ensuring they are effectively communicating across the entire workforce. For years, banks have been grappling with siloed data and now they must ensure they do not have siloed communications – where time and money could be lost if the workforce are not kept in the loop across the front end e.g. products, solutions and services, and the back end e.g. banking architecture.
By harnessing the payments ecosystem, banks can collaborate with technology specialists, to keep up with the pace of demand for international, online payments. ‘Open Banking’ will enable banks to access the right technological expertise to solve the challenges they are facing on a daily basis, and provision fully for the needs of their new, existing and prospective customers.
For banks to become competitive in the world of international payments, they need to help their customers make smarter, faster payments.
A foreign exchange platform will help customers to achieve better exchange rates for their transfers while keeping the cost of the transfer down on the bank side – reducing the hidden costs to the customer. At the same time, by harnessing AI and machine learning banks will remain future fit, providing products and services instantaneously to add value to their clients.