Financial Services - Ready for Business in the Year of COVID Transition

Just 6 months ago, no one would have imagined that social distancing would be the normal way of interacting in public settings or doing business. But now, just halfway through the year, we can hardly imagine what it was like going to the store, getting a meal, or going to the bank without a mask, hand sanitizer, avoiding cash, and being vigilant about safe distance. Once unimaginable, I cannot get in my car without having masks hanging from the mirror, which appears to be the norm around town. How we perceive space, safety, and substituting devices for human contact wherever possible now defines how financial institutions, among many other industries, conduct business.

At the same time, these conditions, spurred by the same COVID pandemic, have given rise to a spike in bank service requests. From a flood of refinancing to take advantage of lower interest rates and new loan applications to requests for forbearance on existing debts, investment portfolio changes and withdrawals, and just everyday account services, financial institutions have been overwhelmed with customer interactions – which all now must be conducted virtually from home. This combination of circumstances, of exponential increase in financial transactions, and having to manage them from a safe distance or shelter has forced financial organizations to take a close look at their technology priorities, and to do it fast.

As the Bank Administration Institute (BAI) recently observed:

For retail banks, the spread of COVID-19 has meant a huge change to how business is done as the workforce has suddenly shifted to remote work and there’s been a huge uptick in the amount of work that needs to be done.

Banks with digital-first strategies have been preparing for a situation like this for many years. Although few anticipated and specifically prepared for a global pandemic, the massive digital transformation has prepared the industry to satisfy its customers in ways that were unimaginable less than a decade ago.ⁱ

It is precisely the need to meet the deluge of new customer service requests with social distancing that has forced the question for how financial institutions rely on automation and assess their Digital Transformation priorities.

Achieving Business Continuity in the Now Normal

Digital Transformation as an uber-driver of technology investment and adoption was already a given before 2020, but what has changed is how the COVID crisis has forced clarity on its priorities and agenda. Automation, mobile experiences, processing content, and the processes in which these live have to adapt quickly to the now normal paradigm of social distancing. Broadly defined as a technology imperative, ‘social distancing’ encompasses both the enforcement of physical (person to person) and virtual (sheltering and relying on smarter technology experiences) distance to conduct business. If these were already components of a bank’s Digital Transformation agenda before, they are now the priorities as banks incorporate social distancing as a fact of doing business. Social distancing directly affects customer service, operational efficiency, defense against financial crimes and fraud, and is central to regulatory compliance.

Artificial Intelligence (AI), along with software bots (from robotic process automation – RPA) have quickly jumped to the front of the line as solutions to make social distancing work in banking. As the previously-cited BAI source exclaims, bots are rapidly deployed as replacements of face-to-face customer service interactions, whereby:

“Conversational AI is particularly critical in fulfilling the promise of a digital-first strategy. Modern conversational AI, which has evolved a great deal since the proliferation of chatbots, is able to take the lead and carry out actual conversations with customers and employees. This enables modern digital-first banks to deliver virtual agents that actually help their customers solve problems – a particularly valuable skill at the moment.ⁱⁱ

Indeed, using bots to replace humans in frontline customer engagement offers the promise of becoming the next big frontier of AI-led automation.

Despite their promise, AI technologies cannot help banks adapt to the now normal social distancing imperative. Because we are so used to using automation to achieve efficiencies and improvements, we are quickly learning that these are merely fixes when the fundamental processes of engagement remain unquestioned. What separates transformation from mere automation, accordingly, is the willingness banks have to ask hard questions about how they operate, how they interact with employees, customers, criminal threats and regulatory entities. To the extent that social distancing has changed the ways banks do business, it has by necessity forced them to question how they view automation, technology, and the processes through which they interact with people (customers and employees). Transforming business as usual to smart business starts with questioning the fundamental interactions between people, processes, and content.

Raising Your Digital IQ

Foundational to transforming the business of banking to meet the COVID crisis is the willingness to question how you have done business, the willingness to see ‘the way we’ve always done it’ as a problem. It is this ability to confront a problem, take an objective look at it, and bring the right tools to understanding how it can work that is the first step in transforming for business continuity. This first step, taking a fresh look at processes, content, and technology, is raising your ‘Digital IQ.’ⁱⁱⁱ

Not an academic exercise, raising a bank’s Digital IQ is fundamental to adapting its business practices and supporting automation to the socio-economic conditions that the COVID-19 pandemic have forced upon us. Processes are being re-imagined because of AI, and everyday processes for customer onboarding, delivering services such as credit and lending, and protecting against cyberattacks, identity theft, and money laundering have to be critically re-examined today because virtualization and automation technologies, while necessary for social distancing, also raise greater threats of abuse by smarter criminals. Having the right tools to question the processes and their reliance on technology is an invaluable first step to making transformation work, but so is raising the intelligence of automation itself – raising its IQ to spot suspicious activity, customer upsell opportunities, and compliance missteps.

Financial institutions will meet these challenges with varying degrees of success, depending on their willingness to ask the hard questions about their digital strategies and have the right tools to do it. Maintaining business continuity in any crisis is quickly finding ways to maintain revenue streams, profits, and satisfaction, when the underlying conditions are rapidly changing. The benefits of automation of customer service, document handling, and addressing vulnerabilities are achievable when banks adapt their processes and supporting technologies to new business conditions. In the COVID-defined normal, that means embracing social distancing as a fact and adapting the business to survive and grow with it.

The COVID crisis will pass eventually, even if we do not have a clear timeline for it. But it will have lasting impact on how people perceive social space, the exchange of things (paper money being the best example), and how they expect technology to work for them. Financial institutions who become the winners embrace these facts sooner and find ways to make social distancing work as a core competency of their business practices.

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ⁱ Ergun Ekici, “How AI Is Helping Banks Serve Customers during COVID-19,” BAI Banking Strategies, May 29, 2020

ⁱⁱ Ibid.

ⁱⁱⁱ In psychology, IQ or Intelligence Quotient, is a measure of a person’s skill at recognizing, understanding, assessing a problem and bringing the right tools to bear on solving it quickly. Whereas intelligence is largely the knowledge one possesses, IQ is the skill with which knowledge is applied to solve complex problems.