20/20 Hindsight Will Help Financial Institutions Around the World Fast-Track Digital Successby Fintech News Singapore August 6, 2020
Just like in almost every other industry, financial institutions have been planning and implementing increased digitalisation for some years. However, the coronavirus crisis and resulting nationwide restrictions have undoubtedly accelerated the rate at which new tech and processes have been launched.
Banking Circle research commissioned amongst financial institutions across a number of geographies just before COVID-19 closed the shutters on much of the global economy aimed to look at the changing trends in the development, delivery, and support of banking services for businesses. Once the potential impact became clearer, we adapted the research to focus on the influence COVID-19 is having on the delivery of financial services. In doing so, we gained a unique snapshot of business planning and confidence at this critical and historic time in the life of so many providers.
Whilst we do still face a rapidly changing landscape, one thing became clear very early on: the importance of digital provision. Through the trials of the current global crisis, the value of digital has taken on new and immediate significance.
When asked directly about the impact COVID-19 has had on business planning, our respondents were optimistic. The most common response, at 41%, was that the crisis has had ‘a little’ impact, and recovery is expected to be swift. Around a third (32%) said that the virus will affect their business ‘quite a lot’, with changes being made to their business and cost reduction where possible. A quarter (26%) said the impact would be ‘significant and wide-ranging’.
However, the challenges most urgently focusing the minds of the best in financial services are aligned to a business as usual world. More than twice as many (58%) senior executives in financial institutions operating in key European markets said the impact of regulation was one of their top three challenges. Over half (53%) also considered the implications of constantly evolving expectations of customers as a top-three challenge. Regulation and changeable customer expectations are not new challenges, so it is not unreasonable to think that these two issues would have topped any similar poll in the past ten years or more.
Now financial institutions of all types – payments businesses, banks, FinTechs – must take time to understand the future, using the lessons of the past – including those learned during the pandemic – to determine longer-term thinking around the infrastructure that enables success.
Collaboration is a key aspect of a futureproof business, even when the future is unclear. Payments businesses should ensure that business continuity management, business planning, and digital technology design are integrated. They should also look for other organisations as potential partnership opportunities, whether current competitors, partners, customers, or suppliers. The distinction between these categories is blurring all the time and it is increasingly clear that businesses are all in this together.
The message that a customer-centric business model is essential in the era of Open Banking has certainly taken hold, but our research shows that commitment is a little sketchy when it comes to putting new processes into place – especially when other issues are front of mind.
Digitalisation is a journey not a destination or a task to tick off the to-do list: the market, regulation and tech continues to evolve. Even keeping up to speed, let alone getting ahead of the game, involves continual development and will affect every area of the business, so it is vital that everyone is on-board. It is, therefore, extremely important for banks, payments businesses and FinTechs to understand the role of financial infrastructure alongside new applications, services and solutions, working together to optimise delivery of the right propositions to meet customer need.
Although 2020 hasn’t delivered the clear view we had hoped for, it has provided excellent learning opportunities and 20/20 hindsight will be invaluable to futureproof businesses. This will help financial institutions of all types to regain clarity and confidence and see 2020 as a time that really did lay the foundations for a bold new future.
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