There’s no doubt that both Omicron and the crisis in Ukraine are having impact on both travel and trade. Global trade, payments and expenditure patterns both for retail and corporate clients will continue to shift rapidly. No predictions here on global politics
or pandemic mutations, but I think it is clear where we are headed on both cash and digital currencies.
Capgemini’s World Payments Report 2021, published in October, showed non-cash transaction volumes hit 223.1 billion in Europe and 785 billion
worldwide in 2020. The consulting firm used this data, sourced from central banks, to forecast 17.5% growth in worldwide non-cash transactions volumes from 2020 to 2021, and 18.6% CAGR from 2020 to 2025.
Admittedly published before the rise of Omicron, Capgemini predicted that “as vaccinations advance, planes and hotels begin to see tourists and business travellers again, and shopper confidence builds, [there could soon be a] global spending boom focused
on services, travel and leisure.” There is anecdotal evidence already of customer planning more expensive trips and purchases – effectively pent up spend and demand from the restrictions of the last two years. On the corporate side, there continues to be bottlenecks
in supply chains, plus fluctuating prices for commodities. This in turn is driving large swings in demand and supply in a process that is often still very manual and paper intensive.
But what does this mean for banks? How should they prepare? Put simply, they need to be prepared for
anything. Easy to write but if it’s all about customer service and smoothing out demand and supply then what should and can be done?
Being ready for sudden surges in demand for cross-border transactions, primed to ensure the payments process for customers is smooth and offers minimal friction, and able to spot and prevent fraudulent transactions as fast as possible. To do that requires
the ability to not just triage payments that fail, but also to pre-empt customer demands for cash in different scenarios. It also does not mean automate everything as, especially on the corporate side, advice and options need to be looked at covering everything
from hedging exchange rates to changing payment timings.
This means having to look closely at what customer data is telling you in real-time, identifying trends in payment activity early to adapt to changing priorities and ensure each department is staffed appropriately. Single points of client contact need to
be supplemented – usually via cross-skilled staff supported by the right technology – to not miss out on customer support and advice opportunities.
Some of this kind of agility is just not possible with the decades-old legacy technology present in banks’ systems today. It is vital that banks have a modern technology architecture that can withstand the needs of 2022 and beyond.
There are solutions on the market that make it easy for financial institutions to manage processes and adapt them as time goes on. Software that enables banks to build and edit applications fast using low code. This means they can say goodbye to projects
requiring expensive specialists taking months to rewrite fiddly code.
It also requires where relevant applying both AI and advanced analytics to support staff to excel in their day-to-day roles. This allows organisations to make decisions about the ‘next best action’ for each customer using data from a variety of sources,
within seconds not hours or days. It can also automate communications, so customers are kept in the loop with the status of their asks, whether it be the status of a cross-border payment, query about using a card abroad or something else.
AI can also be used to flag unusual payment attempts by customers, anomalies that a human might not have otherwise spotted, enabling banks to prevent fraud and stop their customers falling victim to criminal activity. This still often requires a personal
intervention, especially where the customer demands it, but can for many activities be fully automated. One client I have worked with has a 94% STP rate for payment exceptions, but that last 6% needs to be handled really well.
Optimising the customer experience in these ways, leads to fewer complaints and takes unnecessary stress away from staff. The result is happier employees and clients, and therefore, higher levels of retention, lower costs, and greater profitability for the
While no one has all the answers on what’s next for travel and trade (other than an assumed continuing turbulence!), it makes financial and operational sense to invest in modern technology to be prepared in any case. The banks that do invest will be prepared
to win new customers as well as retain current ones, giving themselves the best chance of success in 2022 and beyond.