How Has COVID-19 Influenced Retail Banking?
COVID-19 pandemic has influenced not only healthcare but also all of the other industries. In the time of the economic recession, when millions of people are losing their jobs and small and medium businesses keep shutting down, it is crucial that the financial sector continues its work.
According to Reuters, global financial regulators are talking to the government to give permission to the employees of financial firms to work in the office instead of their homes, while countries like the US and Great Britain have listed financial workers as key staff who are allowed to travel to work.
People Are Stressed, Banks Are Closing
People across the world already have enormous stress related to their health and financial situation. It is important to give them access to financial services without putting more burden on them or exposing them to the risk of getting infected.
Thankfully banks are very proactive in minimizing the number of customers who can enter their branches. Many banks have limited their working hours, some are serving customers only by appointments and making sure that clients have enough space between each other to keep the virus from spreading so fast. Some banks went ahead and placed special markings on the floor to keep customers from crowding the space. Hand sanitizer dispensers are now also present in most of the banks.
Despite the collective effort to keep the infection from spreading, it is not enough in many parts of the world and companies are taking more extreme measures of protection. DBS Bank of Singapore, for example, has temporarily closed 29 branches until May 4.
Approximately ⅓ of the branches are closed in Singapore but it is not the only country to close banks. Banks across the world are forced to transfer their activities online. However, not everyone is ready and according to EY research in 2016 74% of the Swiss banks still didn’t consider digitalizations as something that would fundamentally revolutionize the financial services industry.
Quarantine – Boost In Banking Digitalization
Interestingly, the Survey on Digitalisation and Fintech at Swiss Banks 2019 showed that banks perceive digitalization as an opportunity and EY noted in their Banking Barometer 2020 that this could be achieved by closing branches, automating processes or decommissioning IT applications.
From this we can see that the current pandemic can actually boost the process of digitization, when banks have to use online services more than they have ever needed to. This can be a rapid boost in banking technology.
First of all banks need to stabilize the essential infrastructure and systems. As more people start using digital banking services, banks are likely to see glitches and bugs that they should fix in a very timely manner. Seamless digital experience is now more important than it has ever been so banks should pay extra attention to how their e-services perform. Banks will have to be proactive, plan ahead by upgrading their capacity and bandwidth as well as stress test as soon as possible to identify vulnerabilities of the system.
This Work Is A Long Term Investment
As more people prefer getting various services online, banks who have perfected online onboarding and overall digital experience will increase their popularity compared to their competitors who still rely on physical branches and face to face meetings.
As it was mentioned above, banks were ready to go online, however, no one knew that it needs to happen so fast. COVID-19 pandemic can be used as an opportunity because when trying to disrupt the way consumers interact with the company, customers are usually the ones who take even longer than the banks themselves to readjust.
“The relationship building and cross-selling traditionally done face-to-face by a consultant with a printed brochure is increasingly migrating to social media and digital messaging,” comments Mike Wright, CEO of Striata, a company that provides customer communication solutions.
The best part is that consumers were forced to readjust and relearn how they interact with banks and all the other services. The customer behavior was already changing but now it’s happening at an accelerated pace. As people spend time at home, they quickly adapt to digital solutions such as video conferencing, peer-to-peer payments and online banking.
It is very important to utilize this situation to the benefit of banks and clientele as now banks don’t have to force the change upon the people and prove how this switch might improve their lives. It’s already being done – naturally.
According to McKinsey, digital engagement has increased 10 to 20 percent 4 weeks after the coronavirus started spreading.
We Are Noticing A Behaviour Shift
If customers enjoy their experience now, the trend is likely to continue. This means that even after the quarantine is over people will keep using digital services because they understand that managing their finances online saves time and is more convenient.
Banks can ease the transition and make the experience as satisfying as possible. They should promote digital migration by encouraging customers to use existing digital solutions whenever possible instead of showing up in the office. This can be done by a campaign that could include safety-oriented messages and various tutorials that would help customers use e-services that already exist.
At the same time banks can brainstorm ways to quickly improve or introduce some of the new services. It’s important to focus on the most basic features at first such as changing transaction limits (people start doing online purchases a lot more) and resetting their passwords. Banks should also prepare customers for a possible situation when all of the branches would have to be closed for a quarantine – a situation that might happen within the next few months.
“The benefits of this transformation to both banks and consumers are clear: the bank saves costs, improves efficiency and builds up better business intelligence; customers access services and information faster, using the channels they prefer, whenever they choose,” says Mike Wright.
It’s important to keep an eye on fraud prevention as well. With the growth of digital engagement fraudulent activity also increases. Introducing features too fast might result in security breaches. Therefore, banks should develop more rigorous testing processes and pay attention to customer onboarding. Know Your Customer (KYC) and Anti Money Laundering (AML) mechanisms are crucial during the pandemic.
Usually digitalization results in new API integrations within old mainframe systems, inefficient operations and massive retrainings of staff. This can often be resolved by outsourcing. Buying ready-made solutions is often cheaper and doesn’t require massive training programs for employees. For example, creating a digital onboarding flow can take only a few minutes with KYC provider BASIS ID. Making sure that new customers can join your bank without visiting your branch will give a huge competitive advantage not only now but also after the lockdown. Also, BASIS ID will help you mitigate risks related to financial fraud and stay compliant with all of the necessary regulations.
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