The current pandemic’s impact on individuals and organisations within the banking sector is ever evolving. It has been predicted that the economic environment post-coronavirus is likely to be tough, with a long and difficult journey to recovery.
In the past few months, financial organisations have attempted to show adaptability and flexibility in these times by operating to protect the health of their customers and employees, whilst ensuring that banking services remain consistent and fully available to their customers.
As so much has changed over the past couple of months, banks need to re-adjust to the radical transformation in the way they do banking moving forward, as well as rethink the way they serve their customers and prospects.
Banks are changing the way they do things, this can include educating and helping their customers to shift to digital, by attempting to strengthen the connection they have with their customers through efficient one-to-one marketing capabilities.
How the #newnormal is the new trend
While the financial services industry has changed during the course of the pandemic, so has customer behaviour and needs.
According to the McKinsey Consumer Pulse Survey on COVID-19 (conducted in mid-April in France, Germany, Italy, Spain, Sweden and UK), digital engagement levels among European customers have increased by 20 percent, 30 to 40 percent of customers have expressed a greater need for advice, and 20 to 40 percent request products to aid them through this crisis.
This has definitely driven banks to innovate their products and propositions for customers. The pandemic has triggered a number of financial needs from customers that have to be addressed imminently.
Because of this, banks will have to use their advanced analytical skills and tools to understand how to feasibly serve their customers best and create a personalised offer for them. This has also forced a shift to digital sales and a reshaping of physical distribution.
The financial services industry post-COVID-19 will find itself moving towards a purpose-driven culture. Moving from a control-based culture to one based on strong values that are supported by smart controls may prove to be far more effective in pushing European banks towards a stable position, especially in a future that is predicted to be volatile.
Seeing as the majority of customers under 55 prefer to engage with banks that are guided by values - according to McKinsey Panorama Financial Institutions Insights - it would seem that this is much more essential.
Despite the fact that UK customers are still worried about the economy during COVID-19, pessimism has decreased in the past few weeks according to a UK survey from June 18–21, 2020.
As COVID-19 has accelerated consumer behaviour shifts and caused significant earnings challenges, it will be a task for banks to reinvent themselves, given the difficult macro-economic context and extensive risk of financial distress for both consumers and businesses.
Banks will have to search for new product launch opportunities, alongside reorienting offerings with an advisory and protection focus. Advanced analytics can aid banks in locating relevant niches of prudent growth, but this should also be in cohesion with the digital transformation of sales journeys and marketing.
What about banking services?
For financial services organisations, the challenge is not only to improve digital service journeys, but to also decrease agent time spent on activities of low-value with, for instance, “human-like” interactive voice response (IVR) resolution acting as a substitute.
In the banking industry post-covid, we will find that human-centred remote channels will evolve significantly. Remote access will become a key component of supporting customer needs and the branch channel would not be an exception. Indeed, bank branches will also evolve to solve the complex needs of customers.
While the current pandemic has fuelled the decline in branch preference, 30 to 50 percent of banking customers still prefer the channel for help with complex products or services - according to the Financial Decision Maker Pulse Survey.
Bank branches will increase the use of self-service with limited cash availability at the counters, given the decline in usage over recent weeks. The new normal will show a decrease in basic banking needs, as low as 5 percent. This will significantly affect the mix of branch staff competences, giving them more flexible job configurations.
As many financial services businesses have repositioned their front-line employees to supporting roles, often working from the same place, this may change the action of branch closures. Banks may be able to keep more marginal branches open than before, under the guidance of advisors being deployed for customer-related tasks in a productive manner.
Slowly, but surely, financial institutions are adapting to the new normal in order to stay relevant and competitive.