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Four strategic actions for the financial services sector

Aug 20, 2020

The last six months have been challenging for all organisations, especially those in the financial services sector. Billy O'Connell suggests four strategic actions that can help bolster those in the industry.

COVID-19 has reaffirmed the need for the financial services (FS) sector to show customers what it can do for them in the most challenging of times. Many organisations have done great work in recent months, under extremely difficult circumstances, to ensure employees remain protected from infection, and customers can access much-needed services.  

Before COVID-19, there was no shortage of pressure points on financial institutions, but this is a sector that has proved remarkably adept at rebounding. With the 2008 crisis in the rear-view mirror, the financial services industry was returning to near normal, just as the pandemic struck and created the 'never normal' that we find ourselves in now. 

I recommend the following four strategic actions that should be considered by those in the industry, not only for the short-term but for long-term success too.

1. Doubling down on digital for more accessible customer engagement  

The lockdown and social distancing measures have pushed customers to use online and mobile services to manage their financial products more than ever before. This will likely drive a permanent shift in behaviour toward digital channels. Even those customers who are traditionally reluctant adaptors have had to shift to digital, leading to further focus on online propositions, at pace. Enhancement of digital channels has been a major theme in the financial services industry over the last number of years. The COVID-19 experience will only accelerate the migration to digital services over the next 12 months, requiring FS companies to become more accessible than ever, providing new products and services on digital channels, enabling flexible and live customer interactions, while also ramping-up cybersecurity and anti-fraud tools to ensure protection.  

2. Working remotely, on a sustained basis  

The transition to remote working was an enormous challenge over the last few months for all sectors – FS was no different. The sector needed to rapidly enable remote working processes and security measures to support staff and serve customers, while also continuing to deliver critical business and technology projects. Those who had invested in online collaboration tools and infrastructure, like Skype or Microsoft Teams were able to keep the pace on operations, business change and regulatory programmes. There will be no going back to the exact working environment seen before the pandemic and remote working practices are likely to increase, particularly for specific functions. This will require companies to look at their decision-making structures and build more fluid, multi-disciplinary teams with their partners, while giving greater autonomy to employees, built around trust and inclusivity, so they have the space to ideate and innovate rapidly.  

3. Infrastructure to support agility  

For both physical and IT infrastructure, agility has played an important role across the FS sector in recent months. Like a lot of businesses, financial institutions will be revisiting previous assumptions about office space and may see an opportunity to consider reducing physical infrastructure and building stock because home working has flourished. However, there will still be a need to enable face-to-face interaction and collaboration in the long-term, albeit in a physically different way. From an IT infrastructure perspective, as a sector that is in the early stages of its cloud journey, COVID-19 has shone a light on the benefits of Cloud technology.  Resilience, security and stability of critical business processes and underlying systems, speedy enablement of workforces working remotely and managing a significant increase in customer activity on digital channels – these have all been centre-stage themes over the last few months and are areas where Cloud technology can enable differentiation.  

4. Analysing data for better decision making  

FS companies recognise the value of the data in their systems. Trends in recent years have seen the industry using customers data to provide insights to customers on their spend, saving behaviours and needs, and to create more personalised experiences and more targeted propositions. During COVID-19, data analysis has been more important than ever – it can enable the banks to steer through the crisis, analysing at an early stage where a customer could be in, or is likely to be heading towards, financial difficulty and requires support. It’s not hard to imagine how other technologies, such as machine learning, cloud and cybersecurity will enable a new level of data analysis and will be central to plans going forward.  

There are always challenges with business change and transformation, but the COVID-19 experience has demonstrated that more can be accomplished, at a quicker pace than might previously have been imagined. Being positioned to meet and accelerate through the challenges of recent months has been important for the FS sector because customers have seldom needed it more. Continued focus on change and agility is critical. Now more than ever, stakeholders are more accepting of the need for change, and investments in digital technologies will help create lasting resilience and increase service efficiency.  Although the FS industry is in the midst of a very challenging period, we are seeing real agility at play, and there is an opportunity to build on this momentum to accelerate strategic change more broadly within the sector. 

Billy O’Connell is Head of Financial Services in Accenture.