The Covid-19 pandemic has accelerated the digitalization that has been in the making and caught up many years of development in just a couple of months. The reluctance of end-users to use branches during lockdown has increased the usage of digital channels tremendously.
According to Tero Niemi, Associate Vice President at Cognizant, digitalization is a fundamental change from the banks’ point of view. For the last ten years, the banking world has been considering digital services as a good way to add value, to bring costs down, and to attract the digital generation. Now, digital services are the core of banking and they determine a bank’s chances of success.
Banks need to evolve rapidly and create new operating models. Here, they can learn best practices from other industries, like webshops. Personal service needs to be redefined and based on customer-oriented experiences. End-users expect banking services to be effortless, fun, and easy to access as they are fulfilling their personal dreams. Banks need to figure out how they fit in the value chain and make the customer journey as fulfilling and positive as possible.
Banks are a part of customers’ most meaningful moments, for example when they are buying their first house or opening an account for their new-born baby. It will be interesting to see how banks are able to personalize the service and recreate the intimacy in the digital channel. Obviously, there must be a balance between human interaction and technology. End-users’ expectations are going up all the time which forces the banks to have a holistic view of the service experience.
Traditionally, banks have been organized around heavy, legacy systems. Agility is now relevant while large structures are being broken off into smaller services which, when combined, can be used to provide better customer experiences. Another big question is the future of the branches. What will be their role, when all meaningful things happen in digital channels?
Cloud solutions are superior when banking services are developed to be faster and more innovative. One challenge in adopting cloud services is regulatory compliance. The services need to fulfill local legislation and regulations. In addition, the cloud platform is an ecosystem of its’ own that has both limitations and possibilities. Businesswise all these aspects need to be holistically evaluated.
Traditionally, banks have been built on control and compliance. Along with the shift in technology, speed and customer-centric view are the new driving forces.
Responding to changing customer expectations, higher operating costs, new technology and an evolving regulatory landscape, Financial Services organisations now also face the uniquely challenging environment created by COVID-19.