COVID-19 bearing on Banking and Financial Ecosystem

At the onset of COVID-19, the Banking and Financial Services industry has been staring at exponential disruptions, both in terms of Banks/Financial Institutions as well as their customers. Banks and Financial Institutions have for decades now digitally conducting most of their transactions.  

However, there is a huge chunk of businesses, which had been delaying their digital transformation efforts. These are Enterprises still functioning quite a few of their banking and finance-related operations through manual paper-based works. The COVID-19 pandemic has forced such Enterprises to look and tap the promising potentials of digitization in newer operational areas.  With an eventually increasing number of manpower working from home, manual banking operations have almost become impossible for businesses to undertake.  

With low transactional volumes during and post COVID-19 opportunities are galore for Banks and Financial Institutions to utilize impending fresher digital platforms, thereby connect effectively and productively connect with customers.

COVID-19’s and newer digital transformation operations

The Scenario

Even until recently, during the pre-COVID-19 period, Banking and Financial Systems were unquestionably unable to operate without physical branch banking.

There are several banking functions where customers are still dependent on physical branch-based transactions.

• For instance, loans related paper processing, new account opening, encashing checks or other hard copy instructions with manual signature captures from stakeholders/authorizing identities/signatories are mandatory
• Eventually, these instructions would have to be sent to the bank for further processing. Hence the more elaborate the transaction, the more voluminous manual paper processing

How can Banks and Financials tackle the scenario?

Restructure policies and strategies to accommodate advanced digital solutions

With the COVID-19 scenario, it is high time Banks and Financial Institutions re-evaluate their internal policies and procedures to make things easy for their customers. Banks are leveraging on newer digital solutions to tackle bottlenecks. Undertaking transactions such as account opening, loan processing, etc. can be made seamless through smart digital solutions where customers could operate from their own locations.

COVI-19 period has presented a great way of ‘reality check’ for many of the strict core policies maintained by Banks and Financial Institutions. Customers would now want to desperately have ‘real accesses’ to many of the related funding extended by the Government through Banks and Financial Institutions. They would undeniably not be happy if these funds do not reach them on time.

Newer customers/enterprises wanting digitized banking operations

Banks who already have existent end-to-end digitized operations are now finding new, eager corporate customers in Enterprises who have been predominantly reluctant to digitization, during the pre-COVID-19 times. A clear change of mindset among Enterprises who were earlier disinclined to digitization is quite evident from statements made by senior officials from the banking and financial sector.  

Digitization aiding newer cost and time cutting prospects

The pandemic times have impressed upon an increasing number of customers, who have started showing keen interest in possibilities of technology implementations that could save on their money and time.

Increase Customer Awareness, of digitization being the new norm and focus on customer centricity

Looking at the trend, many banks have started influencing upon customers with awareness campaigns, the striking cost-cutting and time-saving advantages of newer digitization avenues.

Create a customer-centric digital design to face customers directly, digitally, irrespective of their location, instead of having to go through complex operational steps.

Secure workflow digitizations are huge time and cost savers

Unlike the retail sector, the other corporate sectors operate with more complex manual, hierarchical workflows, secured authorizations, and signature requirements from multiple decision-makers.

The COVID-19 scenario has motivated clients, on the utility factor as well as the intuitive capabilities of technology conversions and security implementations for such complex workflows.

Rewarding customers who go in for digitizations

Digitization in such newer areas are advantageous at both the customer as well as the Bank/Financial Institution’s end.  Hence, many Banks/Financial Institutions, as an initiative to motivate Customers, are considering more incentive plans.

Banks and Financial Institutions are now also considering the provision of credit points to Customers for a specific number of digital usages, the fee for which can be adjusted from their payable service charges.

It is the opinion of financial experts across the globe that not all Enterprise workflows and related transactions can be end-to-end digitized. These include Guarantee documentation, LOCs, collection related documents etc.

However, the onset of the COVID-19 pandemic has been seeing a definite surge in newer digitization avenues among corporates.

Innovative Digital Identity Solutions

For the COVID-19 era, KYC and AML procedures will have to be sharpened further using the latest technology tools.  During the current and future upheaval times, security hackers and fraudsters can easily win their games with prevailing, legacy systems such as Photo ID or government-provided IDs. Such legacy systems can be replaced by advanced digital customer authentication technologies that can:

• Verify and monitor customer engagements and their transactions in real-time
• Leverage on Machine Learning tools for iterative tasks
• Digitized human behavior recognition tools for the utmost precise individual identification
• Legacy password and fingerprint devices are slowly being replaced by digital facial recognition tools that can totally ruin the operations of fraudsters

To know more about our expertise, write to us at analytics@ameexusa.com