McKinsey defines ecosystems as "interconnected sets of services in a single integrated experience." For the insurance industry, that means companies and brokers supporting each other to connect multiple offerings, products and services. That will help customers adapt to new and fast-changing circumstances.
Building this sustainable ecosystem will help insurers and brokers to provide seamless customer journeys and more personalized customer experiences. As we move on from a respond phase to a recovery phase of the Covid-19 pandemic, we all need to adapt to a 'new normal' way of doing business and supporting customers. Here are 3 action points for the insurance industry.
1. Embrace digitalization and an open, transparent culture
Before Covid-19, many insurance companies were still operating with physical files and fixed phone lines in large offices. Now, they are rapidly adopting a flexible, hybrid working model. With the right digital tools even call center employees can successfully work remotely.
With an effective CRM platform, such as VeriPark's VeriTouch, customer service teams can collaborate and Sell, Serve and Solve all in one place. All they need is an internet connection. Cloud infrastructure ensures CRM technology is scalable and secure for sensitive company and customer data.
By developing their AI capabilities, insurance companies can rapidly analyze data to deal effectively with everything from fraud management to digital claim handling. Just as an example, customers can now upload pictures of their damaged car and the insurer's AI can estimate the repair costs. Many companies are also offering digital virtual assistants to support customers and new communication channels, such as Whatsapp or social media, to improve the customer journey with real-time sales support and advice.
2. Support brokers to thrive in the new normal
Insurance brokers and agents have all felt the impact of lockdown restrictions. It has spurred a fundamental shift in the way they work. Entire teams that would typically be office-based have been working remotely from home and, often, unable to meet face-to-face with their customers.
These mostly small or mid-size companies often don't have the tools and technological expertise to adapt to this new normal at speed. Insurance companies, many of whom rely on agents or brokers, have an important role to play in helping agents support customers. For example, with tablet applications agents can do video calls and get digital customer signatures.
They can also conduct customer needs analysis and eligibility checks. It is even possible for a digital virtual assistant or chatbot to undertake the initial eligibility screening, leaving the agent to provide more detailed and personalized advice in a video call. With a seamless and coordinated 360 degree view of the customer, insurance companies and brokers can gain a better understanding of customer needs, vastly improve customer experience and boost sales.
When brokers are empowered with technology, they are most likely to play a much more crucial role in supporting pre-sales and post-sales processes of insurance companies by engaging in initiatives such as insourcing claims processing and underwriting with Power of Attorney.
3. Provide customers with hyper personalization
Highly personalized customer offerings, based on comprehensive and accurate customer data, are becoming the new norm in insurance. Many customers have experienced dramatic life changes in the last few months and are now more than ever before concerned about their health. The customer mindset for health insurance has shifted from a nice-to-have to a necessity. They are also demanding more innovative and personalized insurance products to meet their new needs. On demand car insurance, for example, allows customers to pause their premiums while they are in quarantine or lockdown and not using their car.
The pandemic has brought many economic and social upheavals. For customers, this may mean changes to their employment status and financial stability. It may even result in changes to their place of residence and, as such, their social support systems and well-being. The key to lasting relationships between customers and their insurance broker and provider lies in the ability of the industry to engage with customers seamlessly through multiple channels and offer flexible, creative solutions to their present and future needs.
Would you like to find out more? If so, get in touch with us!
An interview with Zubair Ahmed, Executive Vice President & General Manager of Middle East & Africa at VeriPark
Today's retail banking market is hyper-competitive. One of the biggest challenges banks face is how to remain top of mind and be the primary financial institution (PFI) for their customers. In this interview, we asked VeriPark's Executive Vice President & General Manager of Middle East & Africa, Zubair Ahmed, to outline some of the ways banks can become the PFI for their customers.
Q: What do you mean by primary financial institution (PFI) and why is it important?
Becoming your customers' PFI involves much more than persuading them to open an account with you. It's about building the emotional connection that makes your institution their trusted first point of contact for everything from savings and loans to longer term financial planning, such as mortgages and investments. Customers have more choice than ever before. They have thousands of financial institutions available at their fingertips. This means they can easily select the best bank for different products.
In a well-connected digital world, they are also not restricted by bricks and mortar branches or the location of ATMs. This access is still important, but it's only part of the overall equation. As a result, banks have to ask themselves 'how do we capture customers?' and 'how can we nurture that relationship to build loyalty? In other words: How can we become our customers' primary financial institution (PFI)?
To improve customer retention and increase profitability, banks must remain top of mind and become an invaluable daily resource for their customers. The keyword there is daily resource. It's all about becoming part of your customers' lifestyle rather than simply being a banking app, website or venue where customers go just to do their banking.
The fierce competition for market share is likely to intensify as disruptive forces, such as digital technology, continue to change the landscape of the banking industry. We've already seen lots of new trends and market entrants competing for market share over the last two decades. Now, the Covid-19 pandemic is expediting yet more inevitable changes.
Q: What impact do you see Covid-19 having on customer behavior?
There has been a huge shift to digital; not just in banking but also in other areas such as online shopping and booking travel and hotels for example. This has been one of the biggest ways human behavior has changed since the pandemic started. More than ever, customers are ready for digital experiences.
There are big opportunities here for banks to add value. Customers want fast, convenient digital experiences with self-service tools and more choice. Yet, they still love having expert advice at their fingertips; when they want to go deeper into a product, they value human engagement. And, they don't want to have to wait around for it.
One thing that remains the same in the pre and post pandemic world is trust. But, banks now need to exhibit their trust worthiness in the digital as well as the physical world.
Q: Has Covid-19 been a wake-up call for retail banks in terms of digital transformation?
Many banks see these disruptive market forces as a difficulty or threat. In fact, they are an opportunity to expand their services to current and new customers. We are already seeing this happening, even just in the last six to nine months.
We have found that, when they embrace the changing landscape, banks can deepen their customer relationships. In some cases, we've seen customer acquisition rates climb by up to 10% and customer interactions increase by around 250%. As a result of this, operating income can increase by as much as 30%.
According to the latest research into the 'new normal' for banking, more consumers than ever intend to switch their primary financial institution and leave their multi-location mega bank. This is another big opportunity for some operators. Pre Covid-19, the propensity to move from a mega bank was around 13%; this has increased to 27%.
There are a number of reasons for this. But, mainly it is because the pandemic has forced many customers into digital banking for the first time. Digital banking is no longer seen as just for millennials.
Q: How can VeriPark help banks become the PFI for their customers?
Digital customers are often seen as less loyal because they have more options and it's easier to change banks if their needs are not met. Customers can manage multiple providers from a single mobile or laptop screen. However, this is not what excites them.
They don't want to have one app for their credit card, another for lifestyle discounting and a third for budgeting and planning. They would prefer to have everything they need in one 360 degree app. This Super App concept is what will enable banks to become their customers' preferred financial institution (PFI).
A Super App means having a single mobile app for onboarding, payments, budgeting and planning, savings and investments, loans, insurance and anything else you desire. It all comes built in.
For example, with a Super App onboarding involves just five steps and takes four minutes. Pre-planned, pre-approved elements are built into the rule engine. This requires a lot of integration to pull in the information; document capture, performing OCR, face recognition, video capability and more.
It's not just about having a good-looking front-end and then another 20 people in the back office spending the next 48 hours stamping papers. It's a total end-to-end automated onboarding process.
Then, the payments service needs extra functionality; so you can make a payment to a friend who is a customer of another bank for example. Within the same Super App there's a budget planning element where you plan your goals, decide what you want to spend your money on and create interesting ways of saving. You can shake your device and introduce some gamification, so it tells you that the payment you are about to make goes against your budgets and goals.
Other elements might include onboarding for pre-approved loans or meeting special insurance needs, such as emergency 24-hour cover for example. An umbrella concept surrounds the entire app so it progresses with you through life. That way, when you are in a position to start investing money for example, the option is already there for you.
Maybe your investment service connects to the latest stock market stories and tips. Some of these services may come from third party providers but that will be completely transparent to the customer within the app. And, it is all completely personalized; the customer can adapt it suit to their needs and everything that happens is context sensitive.
With a full understanding of an individual customer's budgeting, planning and lifestyle goals, banks can send offers, discounts and coupons at a time that makes sense to that specific customer, rather than at a time that makes sense to the bank. All these functionalities come from lifestyle thinking. In a nutshell, you have a Super App that pulls together experiences and shared memories, such as splitting restaurant bills with friends, into a single app where the functionality enriches as you grow; from graduating and getting your first job to getting married or starting a business.
It's all about transforming from a transaction centric to a customer centric mindset.
Q: That sounds great. Can you give us an example of how it works in real life?
Together, Enpara.com and VeriPark have created rich and meaningful digital and mobile customer experiences. Enpara is living proof that if you do what you promise, the customers will come. Read their success story here.
Watch this 20' session with Zubair Ahmed about the same topic, recorded at the ENBANTEC Retail Banking Conference EMEA on Nov.19, 2020
Would you like to find out more? If so, get in touch with us.
As well as having serious implications for people's health, Covid-19 has had a huge impact on the global economy and business community. Some banks were better prepared than others to handle the unexpected and fast-moving changes. In this interview, Adewale Salami talks about how FirstBank Nigeria (FBN) responded positively to the crisis and how they are now looking ahead and investing to ensure they thrive in this new environment.
Q: How do you think the global pandemic has affected banking? What do you consider to be the biggest challenges?
Covid-19 had a huge impact here in Nigeria. We had a complete lockdown for around three months. Our head office and branches were closed because no one was allowed to go to their office or to their bank. That has now eased but we still have some restrictions.
For us, the biggest challenges were the loss of social interactions between our teams of employees and the fact we could no longer serve our customers face-to-face in the branches. That meant we had to serve our customers digitally and rapidly transform from a cash-based to cashless economy. As a customer-centric bank, we had to ensure our customers were ready to embrace this digitization. That meant having a resilient IT infrastructure and services to support our employees and customers and make sure our banking systems continued running despite the lockdown.
Q: Do you think Covid-19 became a wake-up call for banks in terms of digital transformation?
Yes. Embracing digital transformation became a "must" for banks and customers. The need to move to a more digital banking model has been on banks' agenda for a long time, but the pandemic has made this need for improved digital banking experiences more important than ever.
Q: How did FirstBank Nigeria respond to COVID-19? What actions did you take to support your customers and employees?
We were well-prepared; we had invested in digital core banking and employee collaboration systems last year. We had also put a huge amount of effort into thinking about how we collaborate with our customers and our colleagues. This proved to be a good move; even though we weren't physically together, we could still communicate digitally.
Q: Covid-19 is changing people's relationship with work. We observe an acceleration of remote working trends. How do you see the future of work?
Around 60% of our employees are now working from home, including many IT teams and branch staff. We use Microsoft Teams to facilitate our remote working. This makes everything easy for us; our teams now work remotely without supervision and we even have our board meetings on Teams. This is the new normal. Digitalization is the way to go.
Q: How has Covid-19 changed customer behavior? How important is it now to provide digital offerings and personalization?
Covid-19 has given us a big opportunity to customize and to embrace digital. We saw a spike in digital transactions and e-commerce during lockdown. But, we think this is a permanent change; customers now trust these digital channels and they enjoy the efficiency and convenience of internet banking and mobile banking.
Our focus now will be on digitalization and removing bottlenecks to provide faster, better digital services to our customers.
Q: Regulations in many countries now allow processes, such as customer onboarding, to be completed fully digitally. Do you think we'll see more push by banks to persuade regulators globally to deliver end-to-end digital experiences?
Yes, the whole industry is working on this and regulators are starting to collaborate more with banks. For example, we can do around 80% of the KYC process digitally, including photo ID, but we can't yet do proof of residence digitally. We really want to completely digitize the KYC process because it would significantly improve customer onboarding. I really hope that by the end of this year the policy makers will allow this.
Q: How do you see the future of branch banking post-Covid-19?
Many of the branches that closed during lockdown are still closed. Nationally, only around 50% of them have re-opened. At FBN, we don't intend to re-open all our branches because customers are happy to use our digital channels.
Q: How did VeriPark help you during these difficult times? What functionalities, capabilities that VeriPark provided helped you the most during the COVID-19 times?
Our retail customers started using our contact center and digital channels much more. If we didn't have these capabilities in place, we would have had a lot of issues; it would have been chaotic. Our corporate customers also found they could do everything they needed to do using our mobile app.
The reason we were able to do all this was down to the digital investments we had made with VeriPark. In fact, we were called upon to share our knowledge and digital CRM capabilities in other jurisdictions across Africa, where it became mandatory for all banks to implement similar processes for tracking customer interactions and customer issues.
We have already deployed all the VeriTouch CRM modules and they are being used 100%. Soon, we will be launching the Next Best Action (NBA) module. NBA is focused on using sophisticated rules, analytics and algorithms to better predict customer needs and in turn offer more relevant actions and offers leading to improved wallet share and loyalty. It requires a lot of data, but will ensure our front-line teams have the customer insights to cross sell and serve our customers even better.
Q: What are the future plans for FBN in a post-Covid-19 world? What do you think should be the key priorities for banks to steer a course through the uncertainty and shape the path?
We have to continue with our digitalization, being agile and supporting our employees to work remotely. Our customers trust us and we cannot let them down now. We want to create more value, new product lines and make sure our banking services are in line with their lifestyle so they can bank wherever they are. To do that, we need to continue investing in cloud technology and engaging digital experiences.
Thank you, Adewale. You can read more of our FSI Gamechangers interviews here.
To be digital-ready for the post-pandemic recovery, financial institutions must build resilience, reimagine and reinvent their strategies and operations. In this interview, Connie Leung, Senior Director, Financial Services Business Lead - Asia at Microsoft , tells us how Microsoft has been adapting to the new normal and helping financial institutions to succeed.
Q: How do you think the global pandemic has affected businesses in the financial services industry? What do you consider as the biggest challenges?
The pandemic has become the biggest risk event worldwide and we see that the current implications are profound with the slowdown of the global economy, zero interest rates, loan losses, and widespread business disruptions within the Financial Services Industry (FSI) and beyond.
We are working with our customers in the industry to support their immediate priorities and needs, which we have realized center around a few key things:
This is crucial for organizations to measure risk exposure and modelling. One of the challenges was quantifying Covid-19's impact while ensuring compliance with regulators on core ratios. With the rise of sophisticated fraud and financial crime during this time to exploit the fear and concern of customers, organizations have also needed to step up on security against cyberattacks and identity scams.
Q: Has Covid-19 become a wake-up call for financial institutions in terms of digital transformation?
I would say that it has very much been a wake-up call for many within the industry, both regulators and banks alike. The pandemic has required organizations to adapt rapidly to change including remote working, introducing new digitally connected services for customers and even new business models.
All this requires speed, agility, and applying adaptive measures, and would be impossible without embarking on digital transformation. Within the industry, some organizations were previously putting off digital transformation or seeing it as a nice-to-have. However, the pandemic has been a needed reminder of the integral role that technology plays today.
For organizations that have already begun their digital journey, and specifically, have adopted cloud services for better flexibility and scalability, their transition to remote work has been relatively seamless. The converse is also true. For those who have yet to adopt cloud technologies, they face significant challenges in ensuring that employees are connected to the company network securely during work from home.
Beyond Work from Home, the recent months have also seen an increased demand from customers for digital services. With the preference for services on the go, and minimized physical interactions for health and safety, FSI players have needed to rethink manual customer service processes and take this fully digital. I think that many of our customers are still weathering through the digital journey.
Q: How is Microsoft helping financial institutions in providing the best digital experiences and the agility to rapidly adapt?
Our mission is to empower individuals and organizations to achieve more. During this time, our commitment remains the same and we are supporting financial institutions in their efforts to respond to the challenges of this pandemic, as well as recover faster and reimagine their businesses for the future.
Together with our partners, we are working with the customers in the industry, so they can leverage the technology, expertise, and also best practices from other organizations. Let me share a couple of examples how we do that.
1. Empowering remote work and servicing
For employees who can work from home, we have been helping our FSI customers enable remote collaboration through Microsoft Teams. This has proven effective in ensuring seamless and productive collaboration, both within and outside of the organization, through secure virtual events and services to high-priority customers and high-risk communities through virtual banking.
Combined with Dynamics and partner solutions, employees can now operate across a full range of services to customers, including know your customer, onboarding, e-selling and e-signature. We work with customers to deploy Dynamics 365 and Power BI to drive greater customer insights and better manage client data.
2. Improving business outcomesDuring this time where physical interactions have been reduced and virtual services have been at the forefront, we help relationship managers obtain meaningful customer insights through our digital feedback loop. Developed to be a single source of truth, this infuses data and AI into every process so that more value-added and personalized conversations can be held with customers based on their preferences and current considerations. In turn, the product development cycle can be enhanced with customer feedback on an ongoing basis.
3. Driving operational agility and efficiencyOrganizations are increasingly automating their processes not only to reduce costs but streamline the processes and improve efficiency. Customers are leveraging Artificial Intelligence (AI) and cognitive services to make the automation process accessible and seamless for organizations.
In the last few months, we have increasingly been helping customers move workloads to the cloud. Financial institutions are turning to cloud services because they realize that it is integral for risk management – computer power will be needed to run risk modelling at the capacity they require at this critical time.
This includes a large bank in Australia, whom we are partnering to architect a multi-cloud ecosystem that will host 1,000 of the banks' applications on Microsoft Azure as the primary cloud. Another partner of ours is a leading international bank that we are co-innovating with through Azure to empower innovations in open banking and real-time payments.
Q: What are Microsoft's 3 most prominent products that are helping financial services organizations meet the demands of today?
We recognize the critical role that technology plays in supporting operations and business continuity. As the industry faces new challenges, we are committed to helping customers stay up and running, and transition toward the eventual rebound and moving to the new normal.
I think every customer is unique. And there is no one-size-fits-all scenario. What I would say though is that the most prominent products and solutions are those that make the biggest impact for our customers, allowing them to adapt and transform. Let me name these, which our customers are betting on for their transformation within the FSI industry today:
1. M365 modern workplace solutions
These have been critical for remote working, collaboration and in enhancing the productivity of employees. At the same time, they meet the regulatory security and compliance requirements for financial industry customers.
2. Teams, Dynamics 365 and Data and AI
This second category has been instrumental in driving the new digital customer experience that organizations within FSI need to develop today. Not only do they empower seamless real-time communications to customers, but this is also supported with rich insight for personalized services that aid in customer retention and success.
3. Microsoft Azure
Cloud is becoming an increasingly important part of the equation to enable the agility and resilience required to keep the industry thriving. Specifically, the modernization of core systems such as payments and core banking, as well as security measures to mitigate the risk of attacks. Azure cloud also provides built-in compliance features to address key requirements, meeting the broadest array of certifications and standards in the industry—more than 90, spanning over 50 regions and countries.
We work with a variety of financial services businesses across Asia who choose Microsoft Cloud. Across our various customers, there is one thing in common: we create technology platforms and solutions to help our customers innovate, grow, and transform.
Q: Covid-19 is changing people's relation to work. We observe an acceleration of remote working trends. How do you see the future of work?
I think that remote working is here to stay, and we will transition to what we call a hybrid workforce. Many of our customers within FSI are already planning the comeback with a remote workforce, as people are witnessing how much can be achieved remotely.
We are unlikely to go back to pre-Covid times where work was synonymous with being in the office. Through this time, we have seen how digital capabilities have given employees the flexibility and agility to work and engage at anytime and anywhere. This has been crucial in improving customer engagements, now that they can have the option of interacting with financial institutions both at physical locations and remotely. This same flexibility and agility will drive tremendous changes in working behavior, a change mindset to drive further business outcomes and growth opportunities for our customers.
The pandemic has also shown us that we do not need to be bound by geographical boundaries, which has opened a huge opportunity for organizations in the future of the workforce as they transition toward recovery.
Q: How do you see the impact COVID-19 has made on customer behavior and how do you think financial services can improve it in the long term?
During this time, we have not only seen a significant cultural change within organizations but also in customers, and what they expect of financial services. I think this has been a good example of how digital transformation is about change and a cultural transformation, rather than one that is solely about a change in technology.
At Microsoft, we believe that for organizations to successfully transform and have a Culture of Innovation, there must be a focus on technology adoption and culture and people's capabilities in order for sustained innovation to take place and digital transformation to be realized in the long run.
As I have mentioned earlier, COVID-19 has made the need for digital transformation within the industry so much more apparent and has changed the way that we offer digital capabilities to customers. They now expect even more seamless and personalized digital services, and this will continue to shape the way that products and services are designed, and the entire customer experience.
For our industry to reach the next level of offering improved personalized services to customers, as more data becomes available, AI-embedded services will become the new norm whether it is for KYC, credit score or special offers. What will make the difference in terms of ensuring the success of FSI organizations will be their willingness to accept change and introduce innovation both in their customer services and internal operations.
In the long term, agility will continue to be of utmost importance, and a quick time to market will help raise the levels of innovation within our industry. It is promising that many organizations within FSI are now taking the steps to go fully digital and leverage cloud technologies to improve their operations while looking to embed data and AI to empower decision making.
Q: From banking perspective, regulations in many countries allow processes such as customer onboarding to be completed fully digitally now. Do you think the pandemic will also have an impact on regulations in other countries?
At Microsoft, we have invested in broad engagements with regulators for the past 8 years, where we have had many 1 on 1 discussions with over 120 regulators, global and held several regional regulator summits. Through these dialogues, we have been able to create a constant feedback loop between regulators and customers and improve our services from a regulatory and risk assurance perspective.
It has been a journey of working with regulators to modernize regulations, which has resulted in us being able to establish our position as a trusted advisor when it comes to modernizing regulations, particularly in cloud computing.
To date, we have seen markets around the world updating regulatory guidance to provide clarity on the use of cloud, and a positive impact of cloud adoption by our customers.
I personally work closely with regulators in Asia and we are seeing regulators driving industry innovations particularly in our financial hubs, Hong Kong, and Singapore.
Overall, regulators are concerned about Covid-19's impacts and have been working actively with financial institutions to support business continuity and pandemic planning. Apart from that, they are showing flexibility to maintain resilience and liquidity, and have even been looking at cross-country collaborations to aid this. For example, the Monetary Authority of Singapore has recently announced enhanced data connectivity in Financial Services with the US Treasury and Australia.
Similarly, Hong Kong Monetary Authority (HKMA) and Insurance Authority of Hong Kong have amended their guidelines to allow the use of technology for non in-person channels to avoid physical interactions and our customers have leveraged this to accelerate the launch of new remote digital selling services.
Q: How do you see the future of branch banking post-Covid-19?
Banking channels are evolving to become a combination of various customer touch points which bank will ultimately need to create a seamless experience around for customers to be served anytime and anywhere of their choice, be it via web, a mobile app, in a branch or via the customer hotline.
Technology plays a key role to enable that journey to ensure a seamless and consistent customer experience, backed up by an intelligent digital process and customer data. There will be scenarios that customers need to be served by branch employees. The key to successful interactions would be ensuring that all customer history through other customer touch points with their respective data and insights are all seamlessly consolidated to empower employees with a 360-degree view of customers to interact and personalize their advice to customers.
Q: How does responding to Covid-19 together with VeriPark help financial institutions steer a course through the uncertainty and shape the path?
VeriPark is one of our valued solution partners that enables financial institutions to deliver customer experiences across digital and assisted channels. We believe that digital customer experience is a key differentiator of our customer offerings. VeriPark's solutions have incorporated a 360-degree view of the customer, empowered with AI tools, to help financial institutions develop personalized customers services and gain market share.
Customer experience is a continuous journey and we will continue to work with our partners to create a digital feedback loop to enhance the customer experience. In turn, serve customers better through intelligent decision making within our sector.
Q: What do you think should be the 3 key priorities for the financial services industry in the post-Covid-19 world?
First and foremost, technology is the foundation for digital transformation.
Data from Microsoft and IDC's latest study, "Culture of Innovation: Foundation for business resilience and economic recovery in Asia Pacific", revealed that 68% of organizations in our region is accelerating the pace of digitalization in response to this crisis. Today, technology is no longer a nice-to-have, but a must-have. Organizations thus need to focus on people and using trusted technology to weather the crisis.
In our new post-pandemic world, there will be new eco-systems and modes of operation. Organizations need to change the way they operate and pursue partnerships as they expand into new business and markets. Choosing a technology partner is key to support the growth, agility, and operating models to capture the business opportunities and markets expansions.
Organizations recognize that they need to embrace a culture of innovation and that fostering an environment where continuous innovation can thrive is the key to long-term resilience and success.
Specifically, 74% of all organizations have found innovation to be critical or important to their performance and resilience. Even more leading organizations with a mature Culture of Innovation share the same belief (98%). To do this effectively, organizations need to strengthen the pillars of People, Data, Processes, and Technology, which will require hard work but can pay dividends in the future.
Thank you Connie.
Work and life will never be quite the same again after Covid-19. For the financial services industry, the pandemic created an imperative to reconfigure operations to ensure business resilience. But, it also offers an opportunity to transform and reimagine business models. We spoke with Patrice Amann of Microsoft to find out more about how financial institutions must adapt if they are to thrive in the 'New Normal'.
Q: How do you think the pandemic has affected businesses in the financial services industry? What do you consider to be the biggest challenges?
The comment from Satya Nadella, Microsoft's CEO about how Covid-19 has forced two years of digital transformation in two months went viral earlier in the year, and this has been witnessed in all sectors of the economy, whether public or private. Some industries have been impacted severely such as hospitality and travel, all others have been impacted to a lesser extent. Financial Services Industry, however, has faced some specific challenges.
When the pandemic struck and countries went into lockdowns, the immediate challenge was that all financial institutions, as a key wheel of the global economy, needed to rapidly migrate to remote working. Suddenly, no one could go to their usual work location and execute on daily business to keep the economy going: this was a huge business resilience issue. Some institutions that were progressing their digital transformation were already well prepared for this, but others struggled as infrastructures were not ready and strong enough to connect all employees from home.
Another challenge was that many institutions still have a lot of paper-based processes. This indeed varied across regions and sectors but slowed down execution of very simple and straight-forward processes.
The biggest challenge, however, was the connection (or disconnection) between financial institutions and their customers. This issue touched all segments across retail, commercial and corporate banking.
For example, in the retail segment, some older or more 'at risk' customers, are often more comfortable doing banking in branches. Yet, with lockdowns, they were forced exploring interactions through mobile and/or web channels with mixed success due to accessibly issues. We also saw some commercial banks being slow to implement the various government stimulus support packages in a consistent way and be able to report easily to the performance of these packages.
Finally, it created huge challenges for call centers. Social distancing reduced their capacity just as they were seeing spikes and escalations in call volumes.
Digital transformation has been a key driver for financial services for the last couple of years. It is all about enabling banks and insurers to deliver innovative customer and employee experiences with speed and agility, while also managing the realities of risk, regulation, legacy systems and cost pressures. So, I wouldn't call it a wake-up call, but the pandemic has rapidly accelerated the execution of this journey, as many institutions realized they were too slow and not agile enough in responding to a specific situation. It has accelerated internal cost-cutting transformations, but the main driver has been to improve customer service and resilience.
There is always a reason to not speed up digital transformation, or to not do it now. As financial services recovered well from the last crisis in 2008, and is a profitable business, the general attitude was probably about 'why change now?' There was lower urgency and very few companies were really anticipating such a potential big disruption to their business model with a worldwide pandemic that forced changes in people's behaviors.
It is often hard to force or accelerate a change in operations, business models and even culture as you might only see and measure the relevance of the decision after having been through the journey.
The banking industry now finds itself in a situation where the pandemic has been the trigger that is a key acceleration of their transformation. Some banks had to discover that the hard way. In the New Normal post Covid-19, financial institutions will need to reconnect better with their customers and offer differentiated digital customer experiences and deliver greater value. This will really be a game changer. Banks also have a social responsibility to help their customers and communities recover. As the recovery progresses and the economy recovers, customers will be loyal to the banks that supported them through the challenges.
Q: How is Microsoft helping financial institutions to provide the best digital experiences and the agility to rapidly adapt?
This is part of Microsoft's DNA. Our mission statement is to empower every person and every organization on the planet to achieve more. I think this resonates particularly well right now, as the financial services industry needs to adapt to a new reality.
Through this notion of enabling others, we are helping this industry adapt by providing the best technologies, solutions and services through people to accelerate digital transformation. That will not only ensure business continuity and boost operational efficiency. It will also transform the business to be more relevant to the customer.
We provide a trusted, secured, compliant, hyper-scale infrastructure. This will expand financial institutions' own capabilities, operational capacity, business agility and speed to market. We have a ready-to-use platform that can be scaled and gives access to innovative services, such as Artificial Intelligence (AI), Machine Learning (ML), intelligent automation, advanced analytics, cognitive services and so on.
As we bring together a broad ecosystem of industry partners, we are helping to deliver a range of measurable business outcomes with agile solutions in areas like payments, risk management, cyber security and, of course, differentiated customer experience.
Finally, as financial institutions operate in a highly regulated industry, they always must look very closely at compliance issues and ensure that their controls meet regulatory requirements. We therefore provide a framework of risk assessment as well as tools and functions for Banks to operate in a compliant way and stay in control of their operations.
Q: What are Microsoft's three most prominent products that are helping financial services organizations meet the demands of today?
The first one is obvious; it's Microsoft Teams platform, part of our Microsoft 365 solution. This has been critical in enabling remote working and we have seen a tremendous demand. When we look at the numbers, we see a huge increase in usage. Many large institutions are now using this Microsoft Teams as a standardized way to communicate and collaborate not just internally, but also for some of them to interact with their customers and business partners.
The second solution is Microsoft Dynamics 365, and by extension our power platform, which is our low to no-code environment, driving a massive transformation through rapid deployment of process automation. We hear of customers who, almost overnight, digitized processes and built agile workflows to ensure business resiliency and improve customer experience.
The third is Microsoft Azure, our hyper-scale cloud offering. This has been critical for banks. It has contributed to build resilience by enabling remote work with the support of virtualized desktops. And, it has helped banks to accelerate their process of digitization and to implement and scale solutions to respond rapidly to their customers' needs.
Across all our products, our mission is to democratize access to technology and drive tech intensity so that technologists and non-technologists alike can rapidly build and deploy applications.
Q: Online or digital is not accepted for many transactions in many countries. Do you foresee regulators starting to shift their thinking on this? For example, do you think we'll see more insurers pushing regulators globally to allow digital signatures to deliver end-to-end digital experiences?
10 years ago, regulators wouldn't even want to talk to us as their mission is to supervise financial institutions, not technology providers. We have been starting to work with some of them to learn about what is a regulated industry and how we need to contribute to help financial institutions to operate in a compliant way. We have been working with regulators for more than eight years now and we are all developing a better understanding of what needs to be done to operate services in a compliant way. Not just from a technology perspective, but also from a legal perspective so we can build the right solutions that are compliant by design. Over the years, we have been able to build regular contact and interactions with more than 120 regulatory bodies.
We've also been running, for 8 years now, a Regulatory and Compliance Summit open to all regulators around the world. It started as an annual in-person event, but with the pandemic, it turned now into an almost quarterly communication that we run digitally, and where we discuss the latest trends and what needs to be done. This will help the industry move forward and take advantage of the public cloud.
Increasingly, we are seeing regulators partnering with us: they provide us guidance and directions, and on our side we help them to better understand our Cloud Operating Models and the efforts we are making to support their guidance.
The main issue for banks is that they need to stay in control of what they are doing. So whatever we can provide in terms of tooling, contracts, services, and solutions that can help banks to stay in control is good for the business and is supported by the regulators.
Q: Covid-19 is changing people's relationship to work. We observe an acceleration of remote working trends. How do you see future of work?
We absolutely acknowledge this trend. There is a massive shift to remote working in many industries, including financial services. Some have gone from zero to 100% remote working simply because there was no other choice. And we have had recent communications with large banks who are saying they will continue with remote working.
There are some institutions, often those with very large headquarters and campuses, which are not ready to re-open at full capacity. So, remote working will probably be a long-term trend. That means, from a technology perspective, we have to provide the best communication and collaboration tools and make sure they can be deployed and used in the very best and easiest ways. Our tools are not only empowering employees; they are also enabling solutions for communicating externally with business partners and customers.
This is an area where we are starting to see new behaviors. Some institutions are offering new digital ways of interacting with customers, such as online appointments and video calls. These external calls need to be recorded for compliance and together with our partners, we have some great solutions that elaborate on the regulated recording. This is a massive and growing trend and it's important to support it from a company and management perspective.
But work from home needs to be fine-tuned as it might have an impact on mental health. At Microsoft, for example, we have programs to support our home-working employees in this regard. And we also help our customers to manage this kind of situation in the most efficient way and help them fine tune their own remote working environment.
As Bank employees work remotely for extended periods, the challenge will be to keep them engaged and supported emotionally. Banks have typically trained their employees through traditional classroom locations. Banks will need to build capabilities to help them train their employees virtually.
Q: How do you see the impact Covid-19 has made on customer behavior and how do you think financial services can improve it in the long term?
Spending patterns have changed drastically. Customers are cutting back on travel for example, and increasing their online experiences across shopping, entertainment, and banking. I think financial institutions have a great opportunity to reset their relationships with their customers by offering online frictionless solutions and standardized contactless secured payment solutions.
They can also be proactive and think about what next best action or next best offer they can provide to customers. For example, with Artificial Intelligence, banks can proactively reach out to customers experiencing financial difficulties to offer a specific loan payment deferral or connect SMEs with a government aid initiative. But there is no great AI without great data, so Data Estate will become a major topic for financial institutions to get better insights and deliver more business value to their customers.
Banks are a key engine of the economy and regulators have a duty to ensure they do the right thing and don't introduce or increase risk in the way they operate. I think regulators will always be cautious about making sure banks operate in a compliant way. But they might also allow some flexibility to foster agility.
For example, we see more e-signatures happening and we're seeing a better understanding and partnering with big players in cloud solutions to ensure offers are acceptable to regulators. This must always be done in a very compliant, secured, and trusted way. So it depends on building partnerships with trusted companies, who will do whatever they can to support the norms and standards and work hand-in-hand with regulators to enable banks to be more flexible and agile when delivering new solutions to the market.
Some bank branches closed during lockdown and, although most are now open with social distancing in place, this has accelerated the trend towards more interaction through digital channels. From a customer perspective, many want to see more digitalized processes, so they don't need to go to a branch for non-routine transactions, such as a loan application.
I don't think branches will disappear, but they will be redesigned, and you will see many more digital experiences within physical branches. Sometimes, even with no human presence at all. I can foresee a virtual greeter welcoming and directing customers to self-service tools and I can see us living in a world of remote advisory relationship managers. This is, by the way, already in use or piloted in some 'flagship' branches, where you already can have a video conversation with a relationship manager. Potentially, we could even have 3D avatars. It is all about driving effective and engaging digital outcomes.
What is essential to enable all these new scenarios is to become a data-driven organization. That would enable Artificial Intelligence and advanced analytics implementations to better understand and help customers. It's all about smarter banking.
I am confident that in the next year or so, we'll start to see different value propositions within the branch. People will no longer stand in line waiting to be directed by a physical greeter. You may self-serve directly or be welcomed by a virtual or robotic greeter. These are exciting times that will make banking much easier and more fun for consumers.
Q: How does responding to Covid-19 together with VeriPark help financial institutions steer a course through the uncertainty and shape their future path?
Microsoft and VeriPark have worked closely together for 19 years to create a specific suite of financial services products. These include, Customer Experience & Relationship Management, loan origination, onboarding, business intelligence and AI.
Our partnership with VeriPark has even expanded over the last six months. We have been working together on collective technology and IP to create a Covid-19 response to bring to market specific solutions and capabilities. These will really help financial institutions to reduce costs, improve customer relevancy and drive satisfaction. Ultimately, we are helping banks to create a truly omni-channel strategy and create outstanding customer experiences.
I also strongly believe that VeriPark's solutions enable customers to self-serve more easily. VeriPark has been ahead of the game with Next Best Action recommendations and now we are making it even more predictive so we can drive additional value and enable banks to be more proactive in serving their customers.
Q: What do you think should be the three key priorities for financial services industry in the post-Covid-19 world?
The New Normal will be different in several ways - from an individual behavior standpoint, an economic standpoint and even from a political perspective. Financial services will be transformed deeply.
Ideally, key priorities for these institutions will be:
Thank you, Patrice.
Covid-19 continues to send shocks through the world economy creating huge challenges for corporate banks. It still poses a significant test to commercial and corporate banks' operational, reputational and business-model resilience. Travel restrictions, social distancing and reduced consumer spending have had an immediate and dramatic effect on the cash flows of many businesses. As a result, banks are flooded with requests for commercial and corporate loans and for implementing government policies to provide financial relief to SMEs and corporates.
How banks respond to these financing needs will have a major impact on the economic consequences of the crisis, including whether companies survive and continue to employ staff. As we all adapt to these new realities, one thing is clear; customer-centric banks are tearing up their 'business-as-usual' plans. They are recognizing that existing processes will not be sufficient to support customers through the crisis, or to facilitate a rapid and sustained recovery.
Corporate banks need to reimagine their post-crisis future. Here are 5 actions they can take now to boost the resilience of their own business model, minimize wider economic damage and protect their employees and customers in the "new normal".
1. Shift to a digital-first model
Covid-19 has already changed corporate customer behavior, it made a shift to a digital-first model essential. Businesses now expect banks to deploy enhanced digital tools and capabilities to meet their urgent priorities. Whether these high value customers need loan or mortgage payment deferrals, lines of credit, loans, or credit cards, they expect a rapid response, including access to an advisor to discuss and access the available options.
2. Boost remote-working and hybrid-working capabilities
In the past months, remote working became a necessity. In many ways, this has been positive and many banks now feel there is no going back to the 'old normal'. Indeed, research from Gartner suggests that 600 million employees will be remote working in some form by 2024.
That's 30% of all employees worldwide and represents a 13% increase over 2019. Creating such hybrid work practices, that balance employees' needs with data security and business success, will depend on accelerating the development of digital tools to support new ways of working. For banks, that will include branch automation that covers everything from customer account information to streamlined back-office systems for all transactions, loan and account origination, financial planning and transfers.
3. Touch-less digital journeys are the new norm – make sure you're ready
An omnichannel business model is now the new normal within the corporate banking industry. To be truly successful means banking platforms and processes are well-connected. They must provide a seamless omnichannel experience for customers, no matter which channel they use or switch to throughout their journey. In the end it must be all about creating the best "experience".
Corporate customers use mobile and internet banking more often now. But without a doubt, many customers will continue to visit branches. They may require face-to-face meetings that adhere to all the Covid-19 safety precautions. In the new normal, branches will be digital and dynamic physical spaces. What's needed is to turn traditional branches into "digital branches": an agile, experience-led, digitally-enabled places that are empowered with convenient technology where customers will do everything digitally except touching cash.
Customers' in-branch interactions will involve touch-less, end-to-end digital journeys that start from appointment-taking to digital signatures, sending emails as receipts to reaching out to customers with surveys on mobile for feedback. This will add a "human touch" blended with convenience. It will also increase speed and efficiency and reduce burden on employees at every level.
4. Explore chat to chat banking
Instant messaging and chatbot are becoming commonplace across many business sectors. Increasingly, corporate banking customers will expect to connect with an advisor from the comfort of their own home. For example, a customer may choose to check their loan eligibility and payment terms using chat to chat banking. They may then use the chat function to schedule a virtual call appointment with their advisor before going to an in-branch meeting to finalize the details. Chat to chat banking is not just for straightforward transactions; it can facilitate a seamless sales journey, starting with the chatbot and ending at the branch.
5. Use technology to manage credit risks
This economic crisis is likely to have serious implications for banks' non-performing loan (NPL) ratios. Acting now to anticipate the coming wave of troubled loans will allow banks to respond quickly and sensitively, rather than firefighting. A digitalized end-to-end loan platform helps banks to automate the entire process, from loan origination to credit decision-making and digital collections, ensuring a cost-effective yet customer centric approach.
Over the last 10 years, virtually all corporate banks have moved the majority of their routine transactions to digital platforms. However, before the pandemic, many business customers were still using face-to-face channels for more complex problem solving and financial advice. Most will continue to need and value that human interaction. The common thread among corporate banking leaders will be the agile and strategic adoption of digital platforms that sit alongside a customer-centered mindset and approach.
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As financial institutions dig into the complex process of recovery, one truth is abundantly clear: They need to adapt to the "new normal". This requires businesses, across all sectors of the economy, to be bold, show resilience under great uncertainty and accelerate their pace of digital transformation. It's a sentiment shared by Metin Demirel of AKSigorta, one of Turkey's leading insurance companies, in our latest interview with financial services industry game changers.
Q: How has the pandemic affected the insurance business?
Let's be clear; Covid-19 is more than a health crisis. It is transforming businesses and even entire economies and societies across the globe. The insurance sector is not immune to these changes.
In April and May, we had lockdowns and travel restrictions. As such, motor insurance claims dropped sharply, along with car sales. Then, in June, our economic life bounced back with more car travel than usual, as people were cautious about using public transport. Governments also introduced stimulus packages, such as low cost loans and low interest rates, so we saw car sales jump like never before.
Now, we are seeing car sales go down again from the highs we experienced in the early summer. This is just one example of the rollercoaster times we are living in. It's challenging, but with agile decision making and a strong focus on building relationships with our agents, third parties and employees, we are making it work.
Q: Covid-19 put a spotlight on insurers, do you think it is a wake-up call to transform digitally and improve customer service?
Yes – although, at AKSigorta, we already use the latest technology to support our agents. Customers want their claims and queries handled quickly and effectively so it's essential insurers have fast, accurate and personalized digital offerings. We're well ahead on that score, thanks to our digital assistant, Ada.
Ada already handles around 10% of our operations. That's over two million interactions in the last year and this year it'll be much more than that. Ada is helping us, and our agents, stay agile and responsive to customers' needs.
We've also been using Robotic Process Automation (RPA) for over three years and it's extremely effective. Our business has doubled and our SLAs have improved dramatically. Yet, our employee numbers have stayed about the same. By automating many processes we have effectively created the equivalent of an additional 100 virtual employees – and that has given us huge leverage during the Covid crisis.
We have used that leverage to continue to improve our offer to the 15,000 insurance agents, brokers and banks across Turkey that use our services. Although, as an insurer, we have limited direct contact with our end customers. Instead, our focus is always on how we can support our distribution channels.
Agents have close relationships with their customers; they are like family. They understand exactly how to support and communicate with customers during a crisis. For example, if a customer is involved in a traffic accident, they call their agent who usually deals with the repair shop and takes care of everything.
It's essential that we provide an excellent service to all our distribution partners. That allows them to give the end customer a good experience. It's a kind of triangle.
We're also mindful that agents don't just work with one insurance company. They'll work with at least five and maybe ten. They can easily move customers from one insurance company to another, so they'll use the insurer that offers the most efficient and convenient service.
Q: Do you think we'll see more insurers pushing for regulators to allow digital signatures to deliver end-to-end digital experiences?
In the Turkish market, the regulations surrounding end-to-end digital experiences are quite flexible and many insurance claims are already handled digitally. In the future, restrictions on cloud utilization could have an impact. I think this is an area regulators could focus on.
Q: Covid-19 is changing many people's attitude to how and where they work. How do you see the future of work?
I'm responsible for retail underwriting, digital operations and IT at AKSigorta and we have been working very effectively from home since mid March. Thanks to Microsoft Teams, we've found that we can all be in a virtual room together and stay well connected. This has helped us to become more productive than when we worked in the office. We've also become more efficient by using our digital assistant for some of our internal operations.
The pandemic forced us all to work from home. But, we took an innovative, agile approach and combined our teams into squads. When we worked in cubicles in the office, it was actually more difficult to work in an agile way because that set up was designed for hierarchical organizations.
Our employees have really embraced remote working. Commuting, especially in big cities like Istanbul, is a challenge and it's inefficient. Even waiting around for the elevator in a high-rise office creates inefficiencies.
Remote working is also a big motivator for employees. They enjoy working in a less hierarchical way. Now, we are all on Microsoft Teams, everyone can do their job effectively and no one worries about whether someone is a director or a manager.
Q: How has VeriPark helped you to during these challenging times?
We have been working with VeriPark for many years, especially on CRM. Although we work with distribution channels, we still need to monitor our customer touch points. Car repair shops, for example, act on our behalf and the service they provide to customers affects our brand reputation.
When we implemented VeriPark's CRM solution, VeriTouch, we integrated more than 20 partners and even outsourced part of our call center. This has been a huge help to us, especially during the Covid crisis. The call center service is amazing and I was particularly impressed by how smoothly they transitioned to home working; VeriPark's tools definitely helped with that.
Q: What are the future plans for AKSigorta in a post-Covid-19 world?
I believe this is going to be a new world. We will not be returning to how things were before and the businesses that adapt will be a great success. Those that can't adapt will probably not survive.
AKSigorta is adopting an agile working environment because it is the right fit for this new world. That means working remotely on a flexible schedule. We are already working with a consultancy to plan how the whole company will work like this from now on.
Working in an agile way is the key to future success. Covid-19 is accelerating our digital transformation and it will bring new products, processes, and customer and employee experiences. Silos and hierarchies are the old world and, even though insurance is a very legacy heavy industry, we should not try to go back to the old way of working.
Q: What do you think should be the key priority for insurance companies in this new world?
We are investing heavily in Artificial Intelligence (AI) and machine learning, especially on the pricing side. Insurance pricing is challenging since you are giving a price for something that is not certain. And, you need to segment customers to give them a fair risk price.
We have already started to see the benefits of this investment during the Covid crisis. By applying AI we can reduce our prices and improve customer experience with faster decision making. But, crucially it also means we can constantly monitor and adapt our pricing to increase our market share and profit.
If you would like read more about the CRM digital transformation partnership between AKSigorta and VeriPark, you may find this case study interesting.
You may have seen the recent meme that asks: 'Who led the digital transformation of your company - the CEO, CTO or COVID-19'? Of course, everyone answers 'COVID-19'. There's an element of truth combined with irony; the pandemic has accelerated digital transformation, particularly in retail banking.
The pandemic isn't over and it's impossible to predict exactly how the retail banking landscape will look as the world, slowly and unevenly, emerges from lockdown. But, we're likely to be dealing with an era of uncertainty, social distancing and economic disruption for some time. Banks are juggling multiple priorities, including managing revenue and low interest rates alongside increasing demands from customers who are changing their behaviors as they deal with their own financial pressures.
How you deal with these challenges will not only define the future of your bank's brand; it will significantly affect your customers, employees and the wider economy. Business planning in this uncertain environment is incredibly difficult. But, there has never been a more important time for banks to embrace the opportunities offered by digital transformation.
Here are 6 strategies retail banks can act on right now, to support their customers and ensure they are well-placed to thrive in a post-COVID-19 world.
1. Develop a 360 degree view of the customer
Understanding your customers, showing empathy and providing personalized and COVID-19 sensitive customer service is essential. As this crisis is affecting people differently, there's no one-size-fits-all approach. Some groups will be feeling much more vulnerable than others.
With a 360 degree view of the customer, banks can see the full customer interaction history and have an understanding of the entire context of the customer relationship. When banks know more about their customers and their needs, they can communicate more effectively, nurture longer, more valuable customer relationships.
2. Embrace a digital/mobile first strategy
There's no doubt COVID-19 has already driven a rise in online and mobile banking and a fall in branch visits. Delivering an outstanding digital customer experience is now a major differentiator and competitive advantage for banks. Research from McKinsey has revealed that customers who are highly satisfied with their digital experience are two-and-a-half times more likely to open new accounts with their existing bank.
As customers use branches less, banks will need to become experts in digital customer acquisition, cross-sell, upsell and servicing. For many, this will involve a major shift from purely transactional digital banking apps to a more engaging, customer centric approach. Digital customers need advice and support with managing their personal finances, just as much as branch customers.
3. Win customers with tailored product recommendations
Banks have an opportunity to develop products that can help their customers through this crisis. For example, a low interest loan issued at speed via a digital lending platform will be a lifeline for many customers. An effective omni-channel CRM platform will alert banking agents and advisers to a relevant Next Best Action (NBA) based on individual customer histories and transactions. This avoids banks being perceived as distant or insensitive and trying to take advantage of the crisis.
4. Redesign branches as digital advice hubs
Customer behavior is shifting. They have broadly welcomed the convenience of managing their finances through online and mobile channels. However, the in-branch experience is still one of the biggest drivers of both customer satisfaction and sales.
As a result of COVID-19, customers will be more hesitant about visiting branches without the proper social distancing requirements in place. But, digital branches that offer self-service or assisted channels, particularly no-touch ATMs with QR code scanning, will thrive. In addition, many customers will welcome face-to-face advice for high-value services such as mortgages and investments and branch advisers are ideally placed to educate and inform customers about using digital channels.
5. Adopt remote or hybrid working to keep employees safe
During lockdowns banks moved swiftly and efficiently to remote working. With so much uncertainty, it is vital to ensure employees have the support and technology to continue operating remotely. Banks will always need to be ready to adapt to new risks, such as if renewed spikes of the virus lead to more restrictions.
Remote working knows no borders. With VeriPark's branch automation solution VeriBranch, banks can provide their employees with the necessary infrastructure to make sure they are equipped with everything they need in a remote work environment. The solution ensures streamlined, reliable access. Bank tellers can execute transactions such as loan origination, account origination and transfers. Relationship Managers and advisors can continue engaging customers and provide personalized financial planning services, all while working remotely.
6. Keep an eye on the future of the digital customer journey
Visionary banks are always looking at ways to improve the customer journey. That includes assessing the potential of new channels, such as chatbots or WhatsApp. Chatbots, for example, now have both transactional and conversational capabilities and enable banks to offer 24/7 services to boost customer loyalty and sales. WhatsApp is one of the most popular instant messaging applications in the world and has the potential for banking customers to access transactional support and get fast answers to their questions.
Reimagining the banking experience with digital as the default channel
COVID-19 has become the catalyst for digital transformation acceleration in just a few months. We believe this will continue as retail banks rapidly transform themselves into truly effective digital organizations.
The future banking landscape is likely to include new digital strategies for everything from customer engagement to remote working. Physical interaction was once the default option. Now, in most instances, digital will be the default channel.
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The COVID-19 pandemic has radically changed customer behavior and banking operations. Some of those shifts are likely to be permanent. For example, the latest McKinsey global consumer sentiment survey shows that bank customers, in just about every country, have significantly increased their use of online and mobile banking for day-to-day transactions, such as paying bills, rather than visiting a branch.
As parts of the world start to tentatively emerge from the initial stage of this crisis, what does the future hold for those bank branches? To answer that, many banks are now urgently looking at how to optimize their branches to give customers the advisory services they value. Based on the feedback we've had from our international bank customers, we have identified five key strategies.
1. The branch isn't dead, but it needs to be re-born
The number of branch visits is likely to increase as lockdown restrictions are eased. However, it's impossible to say by how much. Some people will be more risk-averse than others and not return to branches at all.
But, bank branches are still relevant and valued by many customers. There's also likely to be pent-up demand for face-to-face advisory services. With social distancing being the 'new normal', branches will need to look and feel different.
Branch re-designs will probably involve more self-service terminals for customers. We do not foresee a rush to return to glass screens between customers and banking advisors, although it is a possibility for cash transactions. However, physical distancing of customers, and between customers and bank staff, is a must.
Banks will have to adopt queue management systems to ensure people do not gather in groups in their branches. Timed appointments with an individual advisor are an effective way of organizing this process. Customers could even arrange those appointments in advance via their mobile banking app, completely remotely and contactless – and track them in the app, in the branch or outside, limiting the need to wait physically in the branch to be served.
Good hygiene and respect for other people's safe spaces will be the order of the day. We are likely to see branch staff work stations spaced further apart (probably at least 3-5 meters). Advisors and customers meeting at these 'isolated islands' will need hand sanitizers if they have to deal with any paperwork but, ideally, branches will move more towards authorization via biometrics, mobile, card or PINs.
2. A true omni-channel approach – with more efficient use of time spent in branch
Customers will still want to use the services of the branches, as they demand human interactions for major financial decisions in their lives or for complex financial matters. They want to get personalized advice and discuss the long-term and higher priority products, such as investments and mortgages. But that doesn't mean digital experience should be left at the branch door. It's unlikely they want to spend a lot of time on administrative tasks.
For that reason, banks need to adapt their processes and give their branch advisors the tools to communicate with the customer both digitally and during the branch visit. For remote communications, the customer should be able to use secure channels for electronic document signing, document upload and electronic communication with 3rd parties.
For on-site branch visits, branch staff should focus on productive and efficient meetings with the customer - in an advisory role – and minimize the time spent on filling out forms, printing and signing. All administrative tasks should be fully digitalized and the need for personal contact and paper documentation for sales and servicing tasks minimized.
When customers can use digital channels to change their address, loan duration or card limit and can simply upload notary documentation for a mortgage, regulatory T&Cs and consent management forms, it frees up time for staff to focus on high-value interactions.
In terms of branch roles, this will mean a switch from cashiers to sophisticated advisors, supported by the ability to communicate, maintain and deliver services to clients remotely. Banks that will manage this – and hide the complexity with a powerful branch automation solution – will be the winners.
3. The acceleration of online and contactless payments
The pandemic has already accelerated the transition to online shopping and contactless payments in physical shops. In Mastercard's global consumer survey, 79% said they now use contactless payments for everyday shopping, citing safety and cleanliness as their reason. This trend is definitely here to stay; almost all (74%) said they will continue to use contactless after the pandemic is over.
Banks can take this opportunity to increase card penetration and usage by communicating these health benefits to customers. You may also need to reassure some customers of the security and reliability of card payments, both online and in physical shops. This might involve reviewing complicated 3D secure procedures (7-10 digit codes are not customer friendly and don't increase security significantly).
Most customers find it more convenient to deal with card servicing issues, such as increasing their limit or changing their PIN, in an online or mobile banking app. Similarly, more SME customers are likely to switch to electronic or online invoicing and banks will need to support quick and straightforward payments of electronic invoices.
We will continue to see this significant shift in behavior with more people expressing a desire for contactless payments. However, in times of crisis, many people rely on a basic reserve of cash at home for emergencies. As such, banks still need the infrastructure to support cash withdrawals.
4. Dealing with cash in branches
There will still be a need for cashiers and cash handling in branches, which means banks will need to adapt to reduce the risk of infection. In high-frequency locations this is likely to mean installing more cash deposit ATMs or dedicating one or more places for highly automated, minimal touch cash handling, possibly separated by safety screens. In smaller branches, it may be possible to equip all advisors with mobile safes.
Counting large cash deposits after branch hours will also become the norm. This will require additional security, such as having two team members count the cash and verify the amounts while under camera surveillance. Staff will need to maintain strict cleaning disciplines, using plastic gloves, sanitizers and masks during all cash transactions and hand washing after each cash handling operation.
5. Large presence with enough space in branches
Ideally, banks should still be present in high footfall areas to serve their customers, but with a high level of branch automation and more space between working places, more privacy and a higher sense of safety while delivering the advice.
This should not mean less branches or less coverage – customers will still expect their bank to be conveniently reachable and branches are an important part of the mix for high-value products.
In summary, successful branches will be those where customers and employees feel safe. The branch of the future is still likely to involve advisors serving customers, but in a well-spaced, ventilated environment with strict hygiene standards. The smart use of technology to maintain social distancing, while making customers feel welcome, will be a key factor in that success.
You can find out more about how banks are adapting to the 'new normal' as COVID-19 lockdown measures start to ease in our interview with Esra Beyzadeoglu of Alternatif Bank.
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According to research from McKinsey, traditionally banks take an average of three to five weeks to make a corporate or SME loan decision. And then, it takes about three months before the company receives the cash. During this coronavirus crisis, with so many businesses in distress, such a slow and tedious lending process is unworkable and unacceptable.
A digital lending revolution is already underway
Corporate and SME clients need loan decisions in minutes and cash in a matter of days. Banks need to radically speed-up their eligibility decision-making process to attract and retain business clients and stay competitive. Embracing digital lending is no longer a 'nice-to-have' future-focused project; it is a 'must-have' capability for all banks competing in the business banking market.
An end-to-end digital journey
VeriPark's Digital Lending solution enables banks to support corporate and SME customers when they need it most. The platform offers a completely paperless process. Business customers can initiate loans, easily upload documents (such as bank statements and company financial reports) and digital signatures, and verify their ID smoothly through the digital portal.
Customers can use the Loan Calculator to select the amount and duration of the loan and instantly find out the monthly installment amount. As soon as their application lands in the lending portal, it flows to the back office and triggers an 'approve or decline' decision engine. If it's approved, the customer reviews the agreement, provides an e-signature and uploads all the relevant documents to the portal. These are sent immediately to the back office to complete the loan set-up and disbursement process.
From loan origination to decision and disbursement - in just 20 minutes
OCR (Optical Character Recognition) technology helps banks to handle large volumes of loan documents, such as ID photos, swiftly and accurately. In fact, once the customer has all the documents to hand, the whole process can be completed in around 20 minutes. What's more, the platform is available on tablets and mobile devices, so there is no need for busy and anxious business owners to go to a branch.
Our digital lending portal connects to multiple credit checking organizations. Banks can also connect it to their CRM systems to check existing customer data. This enables them to automate underwriting and loan approvals according to their own defined credit policies and business rules. If the customer has selected 'Instant Disbursement' during the onboarding process, they will receive their approved loan via the portal as soon as the sale is complete.
Digital lending delivers efficiency gains as well as faster and better quality risk decisions for banks. Business customers will also benefit from a smoother, less stressful customer journey. During this rapidly-evolving COVID-19 situation, banks will need these capabilities to attract, onboard and retain corporate and SME clients.
This pandemic is forcing companies across the globe to rethink their strategies. In particular, it is forcing banks to speed up and implement new digital transformation initiatives. Digital lending is one way banks can help keep businesses running as smoothly as possible during this crisis and be better prepared for the recovery phase.