The COVID-19 pandemic reached every corner of the world, leaving no nation and no market unscathed. It forced companies in every industry to scramble. Digital capabilities are at the center of every financial institution’s recovery plan.
Around the world, banks and securities companies were projected to spend about a half-trillion dollars in 2020 on information technology. Yet TCS’ Digital Readiness and COVID-19 survey found that no more than a quarter of them had core digital capabilities. Financial institutions will need to strengthen capabilities to meet the demands of the future.
Building digital capabilities – Three kinds of Initiatives in three phases
We envision the changes that banks, financial services and insurance companies must make to build essential digital capabilities could be best accomplished in three phases: the current period, the near-future (when the pandemic’s impact begins to wane) and 2022 and beyond (when financial institutions hopefully no longer would treat the pandemic as a top-of-mind operational concern).
The current – Remaining open while remote, automating where possible
In the pandemic, an overriding business objective has been to stay open while doors were closed. The byword for every employee is resilience (no matter the location in which they’re working). Banks and credit card issuers have let customers open new accounts without in-person office visits. Insurance companies saw spikes in their customer contact centers, and many implemented bots that answer frequently asked questions using robotic process automation (RPA) and AI tools.
Increasing value invariably points to the efficiency gained through automation initiatives that reduce costs.
Efficiency is crucial to increasing value to customers while reducing costs. The pandemic has created a demand for a wave of new financial products. Financial services companies that responded fastest to these needs have grown during the downturn.
Near future – Strengthen workforce, pinpoint growth areas
When the pandemic begins to recede this year, financial institutions are not likely to order all their people back to work. Many, in fact, may decide that certain jobs can be done as well, or even better, from workers’ homes. To support that, however, they will have to look for new technologies and new ways of motivating and managing the remote workforce to spur productivity.
The near future phase will also be a good time for digital experimentation.
2022 and beyond – Shore UP digital services, seek new opportunities
In the post-pandemic phase, financial institutions should continue emphasizing their digital channels for customers and enable remote service delivery. They should analyze data patterns to determine how to increasingly personalize services for customers.
Insurers face a separate set of challenges. They need to see themselves in the larger digital ecosystems in which companies from multiple industries collaborate to provide more value.
Leading in the 2020s – Three growth fundamentals
What will separate the financial services companies that come out of the pandemic stronger from the ones that will emerge weaker? We believe it will come down to three core capabilities: 1. A deep capacity for resilience; 2. High adaptability; and 3. Purpose-driven.