Prospering in the face of the pandemic

Mohammed Kateeb, Group Chairman & CEO of Path Solutions, explains how his company reacted to the challenge of Covid-19 and how banks’ needs and requirements changed in the face of the pandemic

International Development Bank in Iraq successfully went live with iMAL*BI from Path Solutions in February this year with the implementation conducted remotely during the Covid-related shutdown – this is but one example of how the pandemic impacted banks and their tech suppliers. One year after the start of the novel Coronavirus pandemic worldwide, Robin Amlôt asked Mohammed Kateeb, Group Chairman & CEO of Path Solutions, how Covid-19 has changed the banking sector?

“The revolution in the banking sector started many years ago with the rise of FinTechs. Covid-19 came and sped up this digital transformation and forced the banks and regulators who were taking their time to respond to industry changes, to react much faster. With the limited access to physical branches, we saw digital transformation and the provision of remote financial services anywhere, anytime and, on any device, dominating the agendas of banks.

“We have also seen the banking sector play a key role in implementing different government initiatives to ease the burden on their citizens. This partnership has played a major role in bringing back the importance of concepts such as ‘responsibility’ and ‘trustworthiness’ of the financial institutions, something that FinTechs have struggled with and couldn’t easily compete against.

“In addition, the usage of cash has been declining for a while, and I expect customers to keep on moving to digital channels for their various services because of the rise of digital economy, plus the end of cash in most markets is almost there. This of course accelerated in the last 12 months only! The banking sector is reacting and cannot anymore afford to be served only by FinTechs.”

Has tech adoption accelerated or has uncertainty slowed it down?

“Covid-19 has absolutely accelerated the adoption of technology in the financial sector and shortened the cycle of products rollout. Seeing what happened to the technology companies’ market valuations over the last 12 months, is a clear demonstration that they have enjoyed a good year while other business sectors suffered.

“From our specific experience, although all banks were in cutting cost mode, all our clients have been demanding more technological solutions and not less with many redefining their strategy and shortening the timeframe for adoption of their services, especially the digital ones.

“Another driver was the need for systemic stability and infrastructure modernisation initiatives to enhance the scalability of their digital eChannels, security, and future resilience; this includes core infrastructure projects.”

Have you seen/do you expect to see any significant changes in FinTech because of the pandemic?

“Yes, I do, and it comes in two contradicting ways, risks and opportunities. I believe the word ‘trust’ has become fashionable again and its importance has increased in the last 12 months. This has swung the power back toward the traditional banking sector. Many of the Neobanks and FinTechs have struggled during the pandemic, and some even went out of business because of the scarcity of funding. On the other hand, large FinTechs which were able to maintain operational resilience were able to survive and some even enjoyed healthy growth.

“With the world changing from responding to this pandemic to recovering from it, new opportunities will be presented to the FinTechs as we are moving to the world of digital economy. In the coming years, I see FinTechs focusing more on partnering with banks and traditional institutions than competing with them. They will be interested in securing their place and defining their role in the new financial ecosystem rather than playing it alone. The banks will also be more open and incentivised to work with qualified FinTechs that can increase the banks’ reach and add value to their offerings.”

Will changes made in response to the pandemic carry on into a post-Covid-19 world?

“Most of the changes to the financial services will continue because the digital economy is here to stay. Many surveys indicated that 75% of the customers who used eChannels will continue to do so after the pandemic. I believe that we will have a new normal that financial services will operate in once the pandemic is over.

“As to the internal initiatives that banks started and accelerated during the pandemic, they have created and/or increased awareness of the need for an agile culture in their institutions, and it does not make sense that they go back to pre-Covid-19 mode of execution after experiencing the tremendous benefits of such changes.

Have you seen a difference in how banks approach tech solutions providers?

“Because of the mounting pressure in the last twelve months and the need for a timely response to customers’ demands for digital services to be serviced remotely, many banks transferred that pressure to the tech providers by demanding solutions. We have seen a spike in the communication with our clients and their demands to expedite the execution of their new or existing initiatives.

“Tech providers have become more strategic partners to the banks than ever before because banks are revealing their key initiatives to their technology vendors and calling for a stronger commitment and closer interaction and alignment.”

How has business changed for Path Solutions?

“Path Solutions has enjoyed stronger relations and more communication between us and our clients than any time before. During the pandemic, our clients have been seeking a stronger strategic relationship with us as they are turning to a party they can trust, and that can deliver. We saw many of our clients discontinue initiatives with other tech providers and turning to us for assistance.”

Can, for example, remote installation really take the place of hands-on implementation?

“For most of the industry, remote deployment has gone reasonably well in a short period of time. After securing and testing the remote infrastructure, technology is by default easier to manage, and we have been doing it for a while now. The cloud, of course, is the ultimate example of remote implementation and management.

“We at Path Solutions, were able to implement key projects, including core banking migrations and upgrades, and successfully go live during the lockdown period. We performed all the tasks remotely, as it was impossible for physical presence because of the restrictions on travel between some countries. I believe that this change has opened for us the possibility to continue executing many of these tasks remotely in the future. After the pandemic is over, I do not anticipate that all implementations will continue to be performed remotely, but the model will evolve to be a mix of both models remotely and onsite with focus on maximising the effectiveness and cost efficiency of projects.”

Has the pandemic altered your own product strategy?

“Not really, as we have been, for a long time before the Covid-19 outbreak, investing in products that can serve our clients under these remote conditions. For example, our whole cloud strategy is based on the remote model. This revolution started many years ago, but what changed is that we are finally seeing the industry in some lagging markets reacting to the need for change, and most of our new products especially Path Digital and Path Intelligence are becoming more relevant to them than ever!”

How do you see Path Solutions evolving over 2021 and into the medium term?

“On the product side, we will continue to focus on capitalising on our investments that we have made over the last ten years to enable our clients to use great technologies focusing on emerging solutions such as digital and analytics powered by AI.

“We will also be changing some business models to fulfil the demand of our clients for a tighter and more strategic relationship. The traditional reactive support of our platform will not be acceptable anymore, and a more proactive approach where we are aware of all our clients’ strategic initiatives and needs and thus align our solutions and support accordingly will become the norm. We view ourselves as the strategic technology arm of our valued clients in this new normal.”