The banking world has been moving towards enabling customers to access their services any time and via any channel for a while now. With the onset of the COVID-19 pandemic, there has been an acceleration towards a number of trends in behavioural change and would predict that many of those changes won’t necessarily reverse as the crisis passes. With this in mind it’s interesting to examine the status of this banking innovation trend pre COVID-19 and some of the factors that are now at play that may affect its development.
Digital-First Was Already Well Underway
The world pre-virus might seem like a lifetime away already, but the trend towards digital adoption certainly began well before anyone had even heard of coronavirus. In fact, customers opting for a digital only or hybrid relationship with their bank have been the majority for some time. Check out BCG, The Race for Relevance and Scale, for figures and breakdowns.
COVID-19 Change Drivers
Thus far, the crisis has driven the use of digital banking tools, even by those typically face to face customers who’d not used them previously. This enforced digital migration demanded by the current situation poses a number of key questions about its aftermath.
Firstly, how long will social distancing be necessary and what effect will the pandemic have on the desire of previously face to face or hybrid customers to renew an in-person relationship once the crisis passes? And secondly, even if health and hygiene cease to be of paramount concern, will those customers actually want to go back to a face to face experience once they’ve experienced the convenience of the digital experience?
With this change in behaviour in mind, will it lead to more branches staying closed, even once the immediate need for their shutting has passed?
‘In China and Italy, for example, four weeks after the coronavirus began to spread, the estimated increase in customers’ digital engagement is 10 to 20 percent. If these customers have a positive experience, it could shift behavior for the longer term.’ McKinsey
What Does The Bank Of The Future Look Like?
The banks that will exit the current downturn with a significant competitive advantage are those who have made the following initiatives a priority:
- Seamless interactions across every touchpoint and channel.
- Engagement with the individual at scale which is key to competing on customer experience and rolling out personalised services.
- The effective use of automation to lessen the workload of staff and further reduce operating costs.
- The capacity to support teams to create value for the customer and the business.
In order to adequately leverage the advantages offered by the implementation of such capabilities, banks will need to “borrow” agility externally. This means ceasing to see fintechs as competition and turning to those with a partnership mentality to implement pre-existing banking technology innovations in a way that is bespoke to the bank. This is undoubtedly the simplest and most effective way to rapidly upgrade customer engagement capabilities, particularly as the platform approach to financial innovation makes this route even more attractive than before.
Learn more about the partnerships approach to banking innovation here.
