The pandemic is putting financial sector’s resilience to the test, throwing us and our customers into a complex scenario ruled by uncertainty. The first half of 2021 is expected to continue much like 2020 ended, with client interactions conducted almost exclusively on a virtual basis, but challenges continue in 2021.
Digital transformation was already underway, but COVID-19 provided a perfect catalyst for acceleration. Making the right investment decisions requires understanding which area will have the highest impact at different levels as well as understanding the change needed on the business culture and technical state.
While hoping that 2021 will bring us back to normal, it is time to re-examine the trends that are inexorably affecting the core of the industry.
The change is guided by three macro categories:
- Demographic shift that put the focus on the client experience. Benefits include: shorter time to onboard; consistent data which can be used for analytics; greater client engagement, retention, attraction; integrated CLM management so more efficient, better experience, more time saved, less TCO
- External factors and trends. Covid-19, the increasing focus on ESG, Regtech and Regulation put Risk as the major driver with main challenges include reporting and suitability on an operational stand point
- Internal reactions increased the urgency on the digital transformation. Benefits include: operational efficiency; integrated solution; saved time and costs from manual processes and inefficient integration layers; scalability and automation.
After this analysis of the market what is clear is that, even if the trends aren’t changed a lot for this year, there is an increasing focus on:
- Efficient client onboarding. The straight through processing of onboarding can improve organisational efficiency and keep customer loyalty high, but the client experience can really be enhanced if the onboarding process is fast and of top quality.
- A higher focus on ESG. Sustainable investments help to better understand risks and opportunities, they link decisions to the trends, make better long-term investment decisions for the clients and reshape the world of tomorrow.
- Analytics boost sales and service. Relevant information is needed to grasp customers’ behaviour. Combining information about client’s lifetime events with the financial institution’s customer database offers a clear advantage for providing differentiated and personalised services and experiences.
- Cloud is becoming mainstream. As well as efficiency and flexibility, a cloud infrastructure also allows sustainability thanks to clean energy transitions enabled by cloud-based geographic analyses and material waste reductions.
Investing on these areas is now pivotal. Not only financial institutions are strive to innovate but also vendor are investing on outdated systems while controlling spending. Firms that have taken the digital transformation of their business lightly before the crisis will fall behind much better equipped firms in 2021.