With the COVID-19 crisis, the problem was that institutions weren’t ready for such a sudden and non-financial crisis, and the move to a remote-based working model meant workflows had to be radically overhauled, creating a ‘new normal’. While the financial industry is quite digitally mature compared to other industries that are more dependent on physical deliveries, banking and FinTech take on new services and processes reactively with a backward-looking approach. This made the transition to remote-based working challenging, and forced everyone affected to seriously consider making long-term changes that can navigate both financial and non-financial crises.
Institutions have been given the opportunity and license to completely transform their processes and come out stronger than ever. Now is the time to shore up and future-proof their core processes. The COVID-19 crisis will have highlighted issues and inefficiencies that have long needed attention but can no longer wait.
Why was it so hard for companies to adjust and shift to a new remote-based way of working?
The financial and wealth management industries previously relied on face-to-face interactions with their professional advisors who are there to provide highly personalized services and advice. This is especially true within the institutional investors.
This reliance on the human touch made companies put off investments into more digital services and instead focus on providing special attention to their customers in the flesh. Additionally, while firms had planned for disruption to their physical locations, none quite imagined social restrictions coming in and preventing employees from physically going to the office.
Other reasons why the industry has struggled to adjust and adapt working processes include:
Banks and other financial institutions have complicated IT architecture following mergers, acquisitions, and regulatory changes
To date, many companies still use on-site legacy systems to manage their businesses. These are highly complex and difficult to maintain. As the financial and wealth management landscape is constantly changing with new regulations coming in, systems need to be constantly updated and improved to ensure compliance.
Additionally, as companies acquire and merge with other businesses, the IT architecture is often locally separated by region or country, making it particularly difficult for cross-border cooperation between departments.
Companies have rarely taken a hard look at their procedures
When things are going well, businesses tend to smooth over the cracks and ignore inefficient processes and opportunities to improve further. The tendency is to adopt the “if it ain’t broke, don’t fix it” mindset.
In order to continue growing, institutions created new products and services for their customers, with each one adding new layers to their procedures and IT architecture. This ultimately doesn’t scale effectively and leaves you with extremely complex procedures to follow manually.
Many firms didn’t account for their staff working from home and the complexities of how this works in practice with cybersecurity, appropriate access rights, and the inability to cooperate in person.
Siloed IT departments don’t fully understand your business processes
The current global COVID-19 pandemic has highlighted the issues of siloed organizations and insufficient data within those companies.
IT architects and developers may be inclined to use more legacy-based technologies and have no incentive to increase their functionality or reduce the level of complexity of the software if it still operates normally.
When your employees can no longer get to the office, you're bound to discover how many workarounds are in place for routine tasks.
Employee satisfaction – people need and want meaningful jobs
Modern employees are driven to do meaningful work that challenges them to enhance their skills and contribute to the organization's bottom line – not just input numbers into an Excel sheet.
With the strain you now have on the workforce, it's actually easier to identify where the bottlenecks are in the process and where you should increase the use of digital workflows and automation to combat these.
If the process architecture doesn’t support this, employee productivity levels drop dramatically. Additionally, it becomes hard for them to believe in lofty company values. So, by not modernizing their processes, companies risk an increased staff turnover, and training new talent is costly.
Things you can change right now
This COVID crisis exposed the gaps and delays companies and departments have in their digital transformation journey. If investors no longer feel that they’re properly served, or the digital experience is not up to par, they will soon start to look at other companies who have better digital services.
In order to solve a short-term problem, you can’t be too ambitious. Communication and transparency are key, not only for getting new clients but to service your existing clients and maintain trust with external stakeholders. Third-party video solutions can help to improve communication with your clients while cloud solutions can make data available in real-time for all staff members and customers.
Ensuring the security of your client data is pivotal. With employees working from home using potentially unsecured networks, scammers will try to take advantage of these weak links. Cloud transformation, VPNs, and fraud solutions must become a higher priority for businesses with employees working remotely.
Refine performance expectations – employees will go through a learning curve with adaptation to new work locations and processes, so expect rises and dips in productivity. Don’t expect things to be exactly how they were pre-COVID-19. Employees have children and family who are also going through challenging times, so flexibility is required to allow them to manage their work-life balance effectively.
What do you need to future proof and change in the long run?
Define your processes. By understanding each and every process in your organization, you can understand where you need the most support.
Siloed departments can benefit from more effective collaboration by using new digital workflows. Back office staff can focus on more value-adding tasks than manually updating client data on a daily basis, while advisors are able to effectively select the best-performing securities for the customer portfolios they manage and quickly provide necessary reports on demand.
Generate ‘what-if’ future business model scenarios now and consider re-evaluating your company’s risk management framework. Focus on technology risks such as cybersecurity, IT capacity, and stability; operational risks such as remote access controls and workforce planning also need to be considered. Revisit your crisis communications plan, not only for business continuity practicalities but also on how to communicate with your stakeholders in order to shore up trust and confidence early on.
Despite these uncertain times, companies, markets, and economies are extremely robust and can emerge from this crisis stronger than before.
Due to the increased strain on IT architectures, most businesses have started to look at how to mitigate the problems they’re currently facing, ultimately advancing the industry at least a year in its digital transformation journey and fixing inefficiencies.
To survive the next crisis, financial institutions can no longer put off transforming their processes – they need to adopt a digital-first approach. We have to get used to the idea that we will no longer work 9-5 together in the same physical location, so we must make technology support the value-adding tasks that humans can accomplish.
Future-oriented business leaders will put the spotlight on creating resilient business and risk management frameworks that can mitigate the next economic or worldwide crisis. Now is the time for managers to ensure that all the necessary equipment, tools, working practices, and technology are in place, which will ultimately help to future-proof their business. Once the coronavirus crisis is over, where will your business be and what do you want it to look like in the future?