Pandemic-accelerated transformation in the financial sector

Written by i-CIO on 25/05/2022

During the coronavirus pandemic, retail banks have had to deal with dramatic shifts in customer demand and behavior, while also contending with fundamental changes in their own operations. Parveen Kaur of NatWest and Carol Anderson of TSB Bank highlight the advanced technologies and innovative processes that have supported the rapid transition.

Digital Transformation   Financial services 

Pandemic-accelerated transformation in the financial sector

The coronavirus pandemic has had a dramatic impact on many industries — but few have had to act as quickly and decisively as the banking sector.

Pressures on personal and business finances — driven by the sharp economic downturn — have dramatically increased demand for bank services such as loans, mortgage payment ‘holidays’ and grants. Online transition volumes have soared as the use of cash has fallen by 30% to 40% in many countries. At the same time, customer-facing bank employees have been classed as keyworkers, alongside the likes of doctors, carers and supermarket workers.

What has emerged is that the situation has greatly accelerated many of the trends towards digital that were already well underway, encouraging a flow of customers to new ways of banking and banks to new ways of working — with that seen as a permanent shift.

In a recent webinar, Workplace transformation beyond Covid-19, hosted by Scottish Financial Enterprise and Fujitsu, Parveen Kaur, Head of Personal Banking Operations, India, NatWest Group, shared her perspective: “We’ve seen unprecedented volumes, driven by the impact of Covid.” In the UK, much of that stems from a flood in demand for pandemic-related initiatives such as the government’s Coronavirus Business Interruption Loan Scheme and Bounce Back Loan, as well as applications for personal loans, overdraft facilities and payment ‘holidays.’

But there has been a concentration of this activity, said Carol Anderson, UK Branch Distribution Director at British retail bank TSB, as bank branches have become much quieter. “With some parts of the customer base, we’ve previously had to work hard to get them to trust digital and do their banking online. But, increasingly, we’ve seen customers who used to come into branch adopting the digital process.”

For such banks, this has required a rapid adjustment in the way they operate and interact with customers. NatWest was well placed to deal with a new demand, argues Kaur, who runs a team of 3,000 in Delhi, Chennai and Mumbai largely focussed on automation transformation. “We had already embarked on the automation journey and it meant we were in a space where we could scale up really quickly,” she said.

But scaling up did not just involve people. The company brought 120 unattended RPA (robotic process automation) bots onto its system to help address the additional demand for mortgage payment holidays alone. And it was able to implement this process automation in the space of just four days — an achievement which even took Kaur and her team by surprise.

“It taught us a number of lessons: we learnt how to bottle up that speed of decision-making and how to get teams together to work towards a common purpose. This soon got replicated in many other areas, where we used automation to support a quick scale-up,” she said.

Applying RPA was necessary because of the limited time the bank had to respond. “Even if we wanted to hire people [for this], it would have been impossible in that time frame,” Kaur explained.

The need for rapid change has also brought greater acceptance of ‘hum-bot’ environments — where people and technology work in tandem. “Where there was once resistance, both from the workforce and the consumer, we’re now seeing a greater level of trust and co-existence in our space,” Kaur said.

“Growth which could have previously taken 10 years has been managed in a few months because of this acceleration.”

Technology has played a similarly important role for TSB during the pandemic. Anderson outlined how the bank has had to be extremely agile in order to meet fast-evolving customer requirements, as well as meet compliance and health and safety standards. “During this period, the number of people downloading our [online banking] app has trebled, while 70% of the fulfilment of customers’ needs for new accounts, sales and so on were through digital channels. We swiftly enabled hundreds of colleagues with the technology to work from home and also [launched] training to keep colleagues and data safe while they were working remotely.”

This has required new levels of flexibility on the part of the staff as well. The changes brought about by Covid-19 saw employees from branches adapting to help customers via video calls or online. Anderson says that this challenge was met with great agility from staff and demonstrates the type of flexibility that is required from the workforce — both now and moving forwards.

“Our colleagues in branches have been real superstars throughout all of this,” she said. “At the start of the pandemic they may have been [involved in] cashing activities but now they are able to interview customers, to deal with business requirements and IT changes. So, we’ve now got a much larger skill base that is far better informed in the workings of the business.”

The introduction of a live chat function to quickly answer customer queries helped to create a scalability that Anderson says they could have “never even dreamt about” previously. She adds: “There’s been a whole transformation and it’s really important we learn from it, so we can build back better.”

The speed of the response required has helped both banks move further along in their digital transformation plans. As Kaur observed, that has been the experience across many industries. “Covid has genuinely accelerated the pace of change,” she said. “Growth which could have previously taken 10 years has been managed in a few months because of this acceleration.”

Balancing innovation and regulationMoving at such a fast pace still comes with its challenges. In particular, the shift to working from home has placed more responsibility on employees to manage their own IT and puts them on the front line of security and data regulation.

“One of the challenges of this rapid innovation is the exponential increase in the number of new technologies and apps we’re now using. We need to be mindful of the regulatory and security risks that may be associated with these,” said Kaur.

Conducting due diligence and risk analyses on these new technologies remains an important stage of implementation, despite the accelerating pace of change. For Kaur and NatWest, this means striking the right balance between the speed of innovation and staying aware of the regulatory and legal responsibilities of the organization.

“We need to make sure that the technologies we are embracing so quickly are good for our businesses and for customers, and protect their data. Without that double-check we [might] see more security risks, data breaches and cyber-attacks, which could lead to a breakdown in customer trust.” New role for business leadersMany of these changes seem to be here to stay. For Anderson, the shift to remote working has meant that TSB employees can be productive from the minute they sign in remotely and can avoid wasted hours commuting to and from work. This has also brought with it many social and health benefits. She added: “People’s well-being and their safety has improved, so we will have to make sure we keep the very best for both colleagues, the business and our customers as we move forward.”

However, the transition to a new way of working will also bring its own set of unique challenges as banks move beyond this initial phase of business transformation. Two issues highlighted by Kaur are the mental health of colleagues and the need to humanize technology.

“How we engage with our teams is going to be a big challenge for leaders and will require empathy and understanding of individual circumstances. We can support them with all the infrastructure but we can’t lose the human touch,” she said. “We will most definitely have to look at how innovation can complement and supplement the human effort to bring about that change and [still] be able to work more effectively.”

It is equally important to learn from challenging experiences in order to continue on the path of progress, says Kaur. “We have seen there is a better way of managing, so we shouldn’t go back to how things were pre-Covid. It will look different, but hopefully it’ll be better,” says Kaur.

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