At the outset of 2020, nobody in the banking industry could have predicted the chain of events that would unfurl. But it hasn’t all been doom and gloom – this year has seen unparalleled technological advancement that will undoubtedly benefit both banks’
internal operations and their customers. But will this momentum continue over the next twelve months and what will the long-term ramifications of the pandemic be?
We will see an innovation switch up
Where challenger banks have typically been leading the way in terms of innovative new products and services over the last few years, 2021 will see this balance out with traditional banks putting far more focus on the digital experience. This will continue to
be a consequence of the pandemic and accelerated channel shift, but also the need for cost efficiency driving banks to further efforts. There may also be a tightening of available capital and new opportunities for banks to buy up challenger rivals. However,
the easy access to technology means the latter is unlikely unless a customer base or brand extension is being targeted.
‘Alternative’ communications channels will be better integrated
The mass shift to working from home caused the use of video conferencing to go through the roof this year. In 2021, banks will leverage this trend to better suit customers who have become accustomed to this way of operating in their personal and professional
lives. With reduced branch opening hours and the high likelihood that social distancing will continue for part of 2021, social media channels and video chat will act as vital gateways for customer communication.
Even post-pandemic, habits formed this year will mean it is unlikely that branch volumes will ever return to what they were. And given that the concept of a ‘traditional commute’ is also set to become a thing of the past, we will see a significant rise in the
use of mobile technologies by banking staff so they can easily visit their customers remotely. For example, meeting customers in their homes either virtually or in-person using a laptop or tablet as a means of gathering information will become an option some
banks offer. This already happens in several countries like Australia for ‘mobile lending’. For those that want an ‘in real life’ meet (IRL as my nephew would say!), this will become an alternative to branch or video.
The pressure will mount to reduce costs and margins
Because of the rocky economic environment, low-interest rates and numerous problems for commercial and retail customers with cash flow issues, banks will have to prioritise driving out cost efficiencies. However, this is where the need to invest in technology
to help maintain service will be critical. All banks will be looking at their branch, sales and service cost base and whilst the people costs are usually the largest and most obvious to target, it is critical to avoid restructures and staff reductions that
happen in advance of having the capability to still deliver the customer sales and service in an alternate way. Projects that help banks streamline operations but not at the expense of service or sales results will be commonplace in every financial institution
next year. This will include how intelligent automation can be used to engage with customers without human involvement or with the right timing to involve personal service when needed.
Banks lock in their digital benefits…but keep a personal touch
As people were forced to go digital this year, many have seen that the grass is, in fact, greener. The next challenge is for banks to extend this utilization and keep customers engaged. To achieve this, banks will need to make sure that there is the right balance
between providing ‘human touch’ and automation across their entire organisation. For example, if branches are not being used, then banks should either accelerate their closure or remodel them to fit with how the customer now wants to engage with their bank.
Whether it is self-service stations or having additional advisers on hand to deal with more complex queries (in person or remote), giving people choice over how they interact is key. Being able to truly go across any channel for a customer need, switching
as you go along, but not losing in the moment context is paramount. Banks locked into inflexible front-end traditional CRM systems with limited end-to-end capability to get work done will have to shift and augment these ineffective systems and processes or
replace them entirely!
Banks will get to grips with the constantly changing landscape
Generally speaking, banks have struggled to cope with ever-changing customer needs, particularly when external pressures such as how to improve their environmental practices, let alone a pandemic, are thrown into the mix. We are, however, already seeing a shift
in many areas. For example, on environmental practices it is becoming about more than (the very important) elements of sustainable lending and investments, with some banks such as NatWest, helping customers measure their carbon footprint. In debt and delinquency
management, banks are more carefully considering how they manage customers close to the edge financially given the unique nature of the pandemic. Many are already improving their pre-delinquency management to be more personalised and effective, as well as
adding new members of staff to cope with expected demand in the next 12 months.
Whilst we have all had to adjust this year far more than ever anticipated, the habits and patterns that have formed are more than just out of necessity and will stay with us going forward. They are a transition towards what would have happened over a longer
timeframe, as well as a needed shift in some broader areas where more recognised issues needed overdue new solutions. This will benefit not just the banks, but their customers and broader stakeholders, including the environment we all operate in.