Digital transformation in banking accelerated by Covid-19

Now more than ever, digital transformation and the ability to respond rapidly – in what is a very fluid situation – are critical.

By David Murphy, Financial Services Lead, EMEA & APAC Publicis Sapient

Unlike the last major financial crisis, which played out over the course of months and years, the current economic upheaval has impacted markets, businesses and livelihoods at lightning speed. Similarly, in contrast to the events of 10 years ago, banks find themselves on the front-line of the recovery, charged with helping to address the acute financial needs of their customers. The ultimate test is whether they can do so effectively and at speed.

Customers at the centre of the response

If there’s one thing we can be certain of with Covid-19, it’s that life isn’t returning to normal any time soon. On the other side of the curve, when the economy shows signs of an upward trajectory, the recovery is likely to be protracted and arduous.

While banks need to confront and mitigate risks – spanning income, operations, capital and reputation – all solutions must start with the customer. And in line with the expected slow pace of recovery, they’ll have to move from shorter-term metrics driving customer decision-making to a far longer-term focus on lifetime value.

Customers will be looking to banks to cut them some slack. Following standard rules and policies won’t work for a population that remembers very clearly the bail-outs of 2008. Since then, banks have focused on improving customer leadership, revenue growth, operational efficiency and automation, but with the emergence of this new crisis, they will need to revisit their communications, policies, business rules and operational processes to ensure they are fit for a very different economic, sociological and reputational era.

Digital transformation’s time has arrived

The availability of new digital capabilities means that banks can fundamentally change their response from previous crises. Organisation-wide digital transformation is the catalyst that enables them to act and implement changes faster than ever before; specifically addressing three key pillars:

Prioritising customer help: Access to significant levels of data means that banks can identify strategies and comms appropriate to different segments, repurpose existing products and generally enable a broader set of personal and business customers to address and take control of their finances. Empowering these customers to digitally serve themselves through the crisis can provide both stability and longer-term growth.

Optimising decision-making: Decision-making and approaches to many of the income, capital and reputational risks, can be optimised through the implementation of technical solutions, such as machine learning and AI. Triaging, adjusting and deploying new models for a more relevant and impactful response will not only increase effectiveness but generate new organisational capabilities.

Maintaining operational resilience: Changing traditional ways of working to enable the successful deployment of technology will be required to secure and maintain operational resilience. This can include assessing and adjusting governance structures, streamlining highly complex and manual processes to reduce the operational burden and retraining staff for remote proficiency.

Clients taking action

We’re already seeing banks take positive steps to leverage existing digital transformation capabilities or accelerate programmes. They’re emphasising strategic thinking and operational efficiency and framing responses around customers. From fast tracking solutions for health workers and vulnerable customers to leveraging cloud-based technology to bridge financing gaps for small businesses, this bold approach is precisely what’s required.

But in the early days of this crisis, there’s a lot more work to be done and many more institutions need to lift their game. Not just to provide the help that many customers so desperately need but to manage the considerable organisational impact and successfully navigate the uncertain digital transformation journey ahead.