In the wake of COVID-19, most industries are adjusting their processes, operations and offerings to help support the needs of their customers. The steps organizations take now could lay the foundation for the next several years. For example, all eyes are on the banking industry. As the world navigates the pandemic, banks are a vital support system for the businesses and consumers they serve, as well as the economy as a whole. During this crisis, there is a key driver behind the banks that are able to respond rapidly and ultimately survive the crisis – digital transformation.
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For example, the business side of banking is a traditionally underserved segment in regard to digital banking. Banks utilizing legacy systems require large amounts of paperwork and tedious processes when helping small businesses take out loans or apply for a line of credit. The coronavirus crisis amplified these shortcomings when applications for the Paycheck Protection Program loans flooded the SBA loan system. The situation brought to light how there is a need for banks to automize and digitize their processes so they can more rapidly respond to change and get capital to small businesses, especially during a time when efficient loan processing is vital to the survival of small businesses.
On the consumer side, the preference of banking digitally has been continually on the rise among consumers, and the COVID-19 crisis only accelerated this. According to PwC’s 2020 Financial Service Technology Report, nearly all (89%) people say they use mobile banking. As people navigate the crisis, most of the interactions they have with their banks are digital. To maintain customer loyalty beyond the current situation, banks will need to offer digital, yet personalized, online banking capabilities.
Leveraging technology to create a personalized customer experience is not new in fintech. For example, there are technologies that allow banks to implement data analytics to offer customers the personalized package bundles or products that make the most sense for them. By prioritizing personalization and seamless digital capabilities, especially in a time of crisis, banks will provide a strong value to customers, and customers will remain loyal to the banks that prioritize these measures.
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While there are banks that have heavily invested in digitization, many of them have only focused on the front-end channels. However, to get the most out of digitization technology, banks need to invest in more end-to-end digitization while maintaining their core systems. If banks invest in the digitization for both the front-end and back-end systems now, they’ll be more prepared to handle the consumer preference shift to digital banking and provide more personalized experiences.
While the banking sector is stronger through this crisis than it was during the 2008 financial crisis, only the financial institutions that have prioritized a digital transformation will be the most prepared to serve the banking needs of businesses and consumers through the COVID-19 pandemic. Technology allows for banks to provide better customer experiences and more efficient processes, which gives banks a stronger ability to navigate the changing market and earn the long-standing trust of customers.
