Rohit Mahna is senior vice president and general manager of the Go-To-Market Financial Services Industries team at Salesforce.
The COVID-19 pandemic has meant the financial services industry (FSI) is witnessing a pace of change and accelerated digital transformation never seen before. Across the world, organisations must navigate the growing financial implications of the economic fallout while mitigating the impact on their workforce and customers. However, leaders are moving swiftly to weather the change.
We recently partnered to conduct a global survey of financial services institutions (FSI) and fintech and industry consultants that reveals how the pandemic has affected their business and furture outlook. Conducted by the Financial Services Club and Ravco Marketing, the survey explores issues such as crisis management preparedness, the pandemic’s effects on existing product lines, and respondents’ current state of mind. Here’s a quick overview of the five key findings.
Unsurprisingly, the survey found the crisis has brought enormous challenges to FSI as leaders seek to ensure continuity of basic banking services while balancing compliance, costs, and business pressures. In the words of Chris Skinner, Chairman of the Financial Services Club and coauthor of the report, “The biggest impact of coronavirus for many of us has been the ability to connect digitally or not. Some banks were ready for working from home, socially distanced, and being in the cloud, but many were not.”
Despite this, many institutions are proving remarkably resilient. For example, 51% of bankers think their response to the crisis has had a positive effect on their customer relationships. Across all respondents, 57% said the crisis has positively affected their relationships with key constituencies, including customers.
These are much more encouraging responses than I would have predicted, given the obstacles financial institutions (FIs) currently face.
The vast majority of respondents (77%) also felt their organisations’ crisis management plans meant they were well prepared for COVID-19. However, the picture is slightly less positive when it comes to government assistance programs.
In most countries surveyed, governments are funneling relief funds through financial institutions as they try to stem the negative economic effects of the pandemic. In the U.S., this stimulus money amounts to about $2 trillion. According to the survey, however, 40% of U.S. finance professionals said they were unprepared to deal with such programs flowing through their institutions — nearly double the global average and almost four times greater than the European results.
The crisis also appears to have given many organisations the opportunity to improve the fit of their current product sets.
For example, 43% of bankers say the crisis has had a positive effect on the market fit for their current products while 23% were neutral. This is certainly higher than I would have predicted, given the harsh impact the crisis has had on our industry.
What’s not so surprising is 60% of the fintech executives surveyed think the crisis has had a positive effect on their products and services. That’s understandable when you remember many organisations have adopted fintech solutions, such as contactless financial services, to address challenges recently created by the pandemic.
As mentioned, respondents say the crisis has had a negative impact across their organisation, with sales, marketing, and operations the worst hit. However, it’s not the same story for IT departments.
Most respondents say they believe the pandemic has had a positive effect on IT departments’ ability to meet key performance indicators (KPIs). Perhaps this reflects the success that IT departments have typically had in transitioning teams to working from home and other remote working.
Staying with the subject of working from home, most respondents think it has had a positive effect on their operations, with the vast majority (83%) saying they support it for the future. Seventy-six percent also say they think it will reduce their office space needs. This indicates that the shift to working remotely is likely to be a lasting effect of the pandemic.
The survey results reveal an optimistic outlook for our industry in ways I find very uplifting. I take heart from the findings that show a large majority (75%) of respondents say they are either optimistic or “trying to be positive.” Only a small majority said they were either “fed up” or “depressed.” Those results were similar across all industry segments and regions.
One explanation for all this could be that organisations are placing trust in crisis preparedness plans, and believe they can build on that. I also believe that given the recent jump in the number of customers adopting digital banking services, and the positive effect this has had on customer relationships, we are likely to see more organisations lock in a shift to digital sales and services.
Skinner echoes this view, saying, “The industry has talked about digital transformation for over a decade. Many are now realising the need to accelerate their investment to become a truly digital bank and be better able to compete with the growing number of challenger banks that are well positioned for a post-pandemic world.”
Check out the COVID Crisis Effects on the Financial Services Industry report for more information and insights.