At the time of writing, despite COVID-19 cases eclipsing 3 million worldwide, stock markets show hesitant uplifts with news of US interest rate holds and hopeful efforts to produce a vaccine. Yet with somber news of recessions already broadcast, a rapid economic recovery and resumption of "normal" life look optimistic.
Organizations across all industries, having undertaken rapid measures to effect business continuity programs while moving workforces to the safety of their homes, are now finding themselves considering the broader implications of the virus. Efforts, for example, to conduct financial health checks and stress testing, deepen customer engagement programs—albeit remotely—or stabilize supply chains are now underway, allowing many leadership teams to begin imagining the shape of the post-COVID world. I recently attended the World Economic Forum Industry Strategy Summit, reorganized within a week to shift from physical to virtual, and the overriding discussion was around strategies to not only absorb the shock of COVID-19, but come out stronger.
For us, and probably many like us, we’re using the situation to work out which parts of ‘normal’ we want to return to.
In financial services, those with digitized systems in place are benefiting from their ability to continue serving customers through web and mobile channels and the scalability of cloud solutions. Those with an appetite for technologies such as AI, or core solutions capable of consuming services via open APIs, are more able to accommodate legislative changes to accelerate the flow of small and medium-sized enterprise (SME) funding, empowered by a more robust view of their financial and risk position. And those that have already embraced FinTech partnerships—often digital by nature—may be finding themselves on firmer ground, having already implemented third-party capabilities such as remote onboarding, digitized anti-money laundering systems or “Know Your Customer” checks, or fraud detection. For others, macro changes may be driving a technology audit, and the impetus to refresh technology or move to the cloud.
But, outside one’s walls, change is happening. Across the sector, tectonic shifts are underway; significant reductions envisaged to the flow of VC funding to the FinTech sector and further tightening of challenger banks’ margins as central banks cut interest rates, are giving way to surges of interest in RegTech, RiskTech, and capital markets startups. Market volatility is creating new winners in trading. WealthTech and robo-advisory tools are much more exposed to suffer a millennial exodus, and younger companies face their first downturn and brace for changes to exit strategies.
As the world begins to steady itself from the initial shock, there are, nonetheless, green shoots in innovation and collaboration. The most significant development I’m seeing is the speed and pace at which digital companies are creating symbiotic relationships and solutions. In Finastra alone, our risk modeling software is being paired up with predictive analytics and extreme scenario modeling partners, to create a holistic, real-time stress-testing and next-best-action dashboard. In addition, in order to help the communities in which we operate, we have mobilized to create a self-service, small business loan application portal connecting banks’ SME applicants to government agencies, even those yet to move to online applications. The rate of innovation and shortened time-to-market is truly the embodiment of “agile” methodology. It is admirable to see the rate at which financial services providers can adapt to changing regulations, as they look to act as the key “transmission mechanism” to keep funding flowing under extreme duress.
Of course, the second- and third-order effects of the virus are never far from top-of-mind. With business continuity now stable and the ability to pivot and scale at speed now demonstrated, the financial services sector’s thoughts turn tentatively to growth and the impact that the crisis has had on less digitally enabled competitors. They’re now starting to imagine the world after COVID and questioning the validity of “normalized” protocols such as working from offices, face-to-face meetings, and large-scale events.
For us, and probably many like us, we’re using the situation to work out which parts of “normal” we want to return to. It will likely be a re-evaluation of business processes—whether travel is required, or if an implementation can be done remotely to the same high standard; whether a large-scale event is vital, or whether we can leverage technology to connect and engage our employees. While the virus disrupts and devastates, it brings with it a chance to reimagine and rewrite the future of work around what’s best for employees and customers. It’s also shown the beauty of the innovation that can happen—through technology—to ensure that life, post-COVID, is full of possibility. Let’s make sure, as a community, we emerge stronger, together.