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Banks would be wise to accelerate their digital and remote initiatives to position themselves well for the post-COVID-19 world.
The COVID-19 outbreak is upending the way the world lives and does business. The immediate health crisis is grave and unfortunately a resolution is a long way off. Large portions of the global population will spend the coming months confined to their homes. As a result, more aspects of daily life are going to be conducted remotely. Work, grocery shopping, and even social gatherings are all taking place via technology.
Banking is no different. Banking has long been a people-based business. Throughout the world, bank branches have served as gathering points in communities. People and businesses have traditionally gone to their local bank to deposit money, take out a loan, or refinance their mortgage. A bank’s vitality to daily life is recognized by virtually every government as they remain one of the few physical locations still allowed open in countries that have put their citizens into quarantine.
Even though banks can remain open, most of them have decided to shut their doors. During my rare ventures out into the streets of Paris, where Efma is headquartered, the vast majority of bank branches are closed. It appears to be the same in many other countries at the moment. Correspondingly, people are being forced to conduct their financial affairs on their phones or computers. Every interaction between a bank and its customers is taking place on a digital platform.
Those banks that do not have slick, reliable interfaces that are responsive to a customer’s financial needs risk losing ground to competitors. Banks that have invested heavily in recent years in their digital offerings are now delivering better remote experiences to their customers. It is understandable for banks to have relied on their branch network in recent years to continue being the central focus of their business. This is a business model that has served them well for decades and there are still many people who go to a branch when they have a banking inquiry.
However, there is now a global pandemic that is preventing people from leaving their homes and threatening retail banking business models. In the midst of this crisis, banks would be wise to peer around the corner and think about the world post-coronavirus. Even when all bank branches are reopened and people are allowed to freely roam the streets of their cities once again, there will be apprehension toward gathering in enclosed areas. Foot traffic in branches is going to take a long time to fully recover, if it ever does.
For banks, this is the time to be rethinking business models and expanding digital offerings. The margins from traditional retail banking may no longer be there when the virus eventually subsides. Customers, many of whom already began their migration away from in-person banking interactions, will now be even more reliant on their smartphones to manage their entire financial life.
So how to capitalize on this accelerating shift? The answer is clear: enhance the customer experience on digital platforms and deliver more value to customers. New tools that offer more versatility and variety to customers should be prioritized. That app add-in allowing customers to purchase train tickets or trade stocks you had been contemplating? The remote onboarding process that was deemed too expensive a year ago? The support center that you were thinking of retraining to help clients via the chat feature in your app? An accelerated digital loan application and approval process? Now is the time to implement these projects.
The world we return to when the pandemic subsides won’t be the same as before. This event will serve as a catalyst for further digital dependence. As Philipp Kristian Diekhöner said in a recent exclusive article for Efma, “All organizations significantly affected should seek to address the complex problems we now face to enhance their value propositions and aim for comprehensive innovation across the value chain.” There is no better time than now for banks to show their customers they can deliver critical support, functionality, and delight, regardless of the channel. Their success may just depend on it.