That’s right. We’ve been in the coronavirus pandemic for so long that people have actually started giving it nicknames. If you’ve been wondering why users on social media keep referring to being in a “panoramic”, “pandemonium” or “panera bread”, you’re welcome. Also, here’s a handy collection from The New York Times for your coping pleasure. Sidenote: “pandemi moore” is the absolute best and you can’t convince me otherwise.
On a more serious note, I thought it would be a good idea to take a step back and reflect on the disruption the past twelve months have brought to the banking industry and the path forward.
Last March, the Dow and the FTSE suffered their worst day since the Black Monday crash of October 1987. With restaurants, hotels, pubs, retailers and transport services shut, US unemployment rates were soaring to Great Depression-era levels. With the IMF predicting that the economic fallout from the pandemic would probably do the global economy more harm than the 2008 Great Recession, the question on everyone’s mind was: “Where do we go from here?”
“Digital”, in short, turned out to be the answer. According to a briefing by McKinsey, the COVID-19 crisis sped up the digitisation of companies’ customer and supply-chain interactions and of their internal operations by three-four years – in just three months. The share of their digital offerings? By seven years.
E-commerce penetration in the US jumped from 17% to 33% in two months.McKinsey
Of course, with customers migrating to digital channels at an unprecedented rate, this wasn’t much of a choice. E-commerce penetration in the United States, for instance, jumped from 17% to 33% in two months. Previous forecasts had anticipated a 7% growth by 2024.
The need to go digital at the speed of light has put an immense pressure on industry players. Customers, even avid branch-goers, have ditched physical banking because of lockdown measures or out of fear or for convenience. And if you ask me, most of them will never look back. Why would they? By now, most banks have made it possible for new and existing customers to apply for loans, manage their savings or get in touch with a customer service representative in just a few taps.
And they shouldn’t stop there. To survive and thrive in a post-pandemic world, financial institutions should take an all-or-nothing approach to digitising their operations, business models and revenue streams. Not only because digital is customers’ new preferred way of banking. Rather because digital capabilities are quickly becoming the single most important thing they’re looking at when choosing a new bank or banking product. Price-based competition is no longer a losing battle but a battle not worth fighting.
The good news? Thanks to advanced digital authentication and analytics solutions, breaking down barriers to delivering end-to-end digital banking experiences has never been easier. Video-based KYC allows financial institutions to securely onboard customers without any physical contact and slashes identity verification time from days to minutes. With the help of artificial intelligence and machine learning, however, banks can aim even higher than low-friction user experience.
Personalisation platforms like W.UP help banks translate the wealth of data they’re sitting on into meaningful insights, both for them and their customers. Then these money insights could be used to get customers in better financial shape through tailored budgeting advice or tips on savings opportunities. Banks can also run peer comparisons and check cash flow patterns to predict looming financial problems and warn high-risk customers before they go into the red.
Which brings me to the point I made in my very first post about how the COVID-19 crisis might affect the banking ecosystem. Financial service providers not only have a real responsibility in helping customers to regain financial stability but also to build resilience in the face of financial shocks. Now more than ever.
The coronavirus crisis has prompted many to re-evaluate the importance of having money tucked away for a rainy day. Bankrate’s February Financial Security Poll found that 54% of Americans have more emergency savings than credit card debt. According to Federal Reserve data, NBC News reports, the amount of outstanding revolving debt dropped below $1 trillion last May for the first time since September 2017. Giving customers access to actionable information, expert guidance and tailored tools will be crucial to keep up the momentum – as well as to build trust, satisfaction and loyalty.