Banks have had to adapt quickly to function during COVID-19. For many, digitisation was the preserve of a few operational processes, and the industry is still way to reliant on paper to operate effectively in a virtual environment. The pandemic has driven home the message that digitisation and automation aren’t optional; they’re essential for resilience through a crisis.

The old school banks need to change to survive.

It’s not just the operational difficulties brought on by the pandemic. Banks in the UK and across Europe need to prepare for the end of the Brexit transition period, too.

Traditional banks have started to become more agile to compete with new challengers to the market who, by their nature, don’t have clunky legacy systems to deal with. But the current crisis has thrown up some fundamental issues with operational integrity that need addressing now, if they are to remain competitive and relevant to customers.

Banks can protect their operational integrity by focusing on four main areas.

1. Agility

How agile are the traditional banks, really? The pandemic proved the need for rapid change:  customer behaviour changed overnight as their priorities shifted; interest rates dropped; the housing market stalled; banks had to support people who suddenly either couldn’t or potentially wouldn’t be able to make loan repayments. Spending patterns changed beyond recognition. No-one could go into a branch, and many banks still rely on face-to-face contact for things like ID verification. Added to all this, the banks had to make provision for everyone – including call centre staff – to work from home.

Those banks who were on their way to digitisation will have been at a distinct advantage – whilst same banks were able to stand up CBIL capabilities quickly, most we are talking to fear the impending default tsunami that will affect personal and business lending and for which most will respond manually and ineffectively.

2. Artificial intelligence, automation and machine learning

In 2019, the Bank of England found that two-thirds of respondents to its survey already used machine learning – mainly in anti-money laundering and fraud detection. It attributed restrictions to internal factors such as roll-out on legacy IT systems and data limitations. Automation, AI and machine learning will revolutionise the sector – allowing traditional banks to compete with their digital-native competitors.

There are some obvious areas where AI will transform the industry. The ability to spot spending patterns that might indicate fraud, for example, or the ability to make instant decisions on things like loan applications and credit limits. This would not only speed up the decision-making process for customers (making for a far better customer experience) but also means banks can compete with the challengers who are already offering faster financial decisions based on an AI-powered risk assessment.

3. Customer experience

We’re starting to see Gen Z coming into the workplace and that’s really going to shake up what customers expect from their banking experience. Most banks are talking about completely overhauling the customer experience, but the reality is harder than the words. There are still banks that expect people to take a physical copy of their passport into a branch to verify their ID, or download, print and post a form to apply for a credit card. People have, on the whole, accepted that, because there was no real alternative. That’s all changing with Gen Z, who have multiple jobs, pay-per-use for their workspaces and their cars, and expect flexibility in everything they do.

4. Data-driven insights

As always, everything comes down to data. Banks have a huge amount of it, sitting largely unused. Think of the potential to use it, to predict areas of risk and opportunity. What could data modelling and predictive analytics tell you about customer behaviour – past, present and future?

We hear a lot at the moment about COVID-19 giving us all an opportunity to reset, to rethink our future. It would be a wasted opportunity for banks to go back to the way things were. My message to the banks is embrace the changes, and use technology and data to build a brighter, resilient future.