From Business Resilience to Sustainable Growth in the New Normal

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According to Capgemini’s research paper,  “COVID-19 and the financial services consumer“, more than 52% of respondents said they prefer self-service bank mobile apps during the COVID-19 outbreak, as compared to 47% before.

Recently, Capgemini conducted a virtual panel discussion on “Business Resilience to Sustainable Growth.” Moderated by The Everest Group, the assembled panel shared many interesting insights into how financial services organizations are having to rapidly evolve and find new ways of doing business in the wake of this global pandemic. The panel consisted of eminent leaders from various financial services organization and academia.

  • Deepak Phatak, Professor Emeritus, IIT Bombay
  • Samrat Das, Chief Operating Officer, PNB MetLife
  • Pradeep Khurana, CIO and CDO, SBI Cards
  • Manoj Menon, Head of Research, ICICI Securities
  • Srinivas Jain, Executive Director, Strategy and Business Development, SBI Mutual Fund
  • Ronak Doshi, Vice President, The Everest Group

In this point-of-view, we will discuss a number of these insights.

COVID-19 is a ‘black swan’ event, one the world neither expected nor experienced ever before. The impact of this pandemic is already being felt by all industry sectors as they scramble to manage their business amid changing consumer behavior, a steep decline in demand, lower profit margins and overall business disruption. Firms in the financial sector are going an extra mile to limit the impact of the pandemic, while attempting to achieve sustainable growth in the new normal. Crisis management and business continuity plans are the the keys to recovery. Financial organizations now need to rethink their business models and look at non-traditional sources of revenue with a greater focus on customer experience in digital channels.

During the webcast, Ronak Doshi, Vice President of the Everest Group, said that COVID-19 presents a challenge to financial services firms greater than the Great Depression.  This is because the pandemic has had a jarring impact on both the demand- and supply-side.  Also banks are central to stabilizing the economy and ensuring business continuity and continued access to funds by consumer.  This complicates matters even more for financial firms.

Adapting to a changing environment

The COVID-19 crisis has caused substantial shifts in consumer behavior in the financial sector, as well.  These shifts span from their channel preferences to their investment choices. According to Capgemini’s research paper,  “COVID-19 and the financial services consumer“, more than 52% of respondents said they prefer self-service bank mobile apps during the COVID-19 outbreak, as compared to 47% before. Similarly, 54% say they are conducting bank transactions over the internet during the pandemic, a five-percentage-point jump over pre-Coronavirus crisis. For the insurance sector, channels such as the company’s website (27%) and social media (26%) remained the top interaction choices for policyholders, which is a noticeable jump in comparison to the before COVID-19 scenario. To address these consumer needs, firms will have to rethink their revenue drivers, look for new product launch opportunities, as well as reorient their offerings towards an advisory and protection focus.

This can be done by adopting the following strategies:

Digital banking adoption

For banks to remain healthy and profitable, digital banking is a mission critical activity. Not only does it improve customer experience (CX), it also increases operational efficiencies and revenue opportunities. In fact, many banks are accelerating their digital transformation initiatives, which were initially intended to increase internet and mobile banking while pursuing core banking modernization. The importance of such a transition is even more heightened now.  Many banks are embracing emerging technologies such as artificial intelligence, the cloud, and analytics to manage rising operational costs, evolving customer expectations, and cybercrime.

New Digital Offerings

To address immediate payment needs, banks are introducing connected cards, transferable debit cards linked to customers’ existing accounts. Customers can use these with trusted parties, authorizing them to use the card on their behalf. Insurance companies are introducing new tailored products as customers are willing to pay a premium for products that promote well-being.

Digitize customer-facing processes

Obviously onboarding a new customer has changed meaningfully due to social distancing requirements and a general work-from-home orientation.  Digital onboarding eliminates the need for physical onboarding in brick-and-mortar locations. Blockchain technologies can also reduce paperwork and speed the processing of COVID-19 related insurance claims. To meet increased customer support needs and refine existing applications, virtual agents or chatbots have been deployed. Banks can collaborate with new-age players to reduce risks and improve time to market.

Industry’s swift response to the disruption

The constantly shifting landscape and the economic shock are impacting the financial services sector in multiple ways — from business continuity issues and operational considerations to the overall financial outlook. But perhaps most in terms of workforce transformation.  Many financial companies had to develop a remote work policy and plan in real time to ensure employee safety.

According to Samrat Das, CIO of PNB Metlife, this is where companies need to ensure they are applying great focus.  By ensuring the safety and continued productivity of their workforces, banks will see benefits in their customer service and still being able to fulfill regulatory obligations.

The infrastructure and platforms on which the company runs on will also need to become more flexible as well. This will increase the need – and appetite – for cloud computing, micro services, APIs, and the “-as-a-service” hallmarks of the emerging digital ecosystem.

Apart from this, financial institutions also need to stress-test their portfolios to better understand the short- and long-term implications of this situation on their businesses. Ronak Doshi of the Everest Group says that his firm is making recommendations to financial services companies to critically evaluate their exposure across each line of business.  From this analysis, firms will then need to develop a holistic IT action plan that takes into consideration near- and long-term consequences.

Funding transformation to drive resilient and sustainable growth

The economic shock of COVID-19 will continue in the foreseeable future, even in the world’s strongest economies. It has increased the need to bend the cost to allow IT find creative solutions for sustainable funding.

Capgemini is responding to the current market situation by coming up with offerings like ‘CG bounce back offering’ and ‘Resilience by Design’ which are ready frameworks to fight business impact due to COVID 19.

‘CG bounce back offer’ is running with many of our global customers to stabilize operations as well as transforming the capability centers to capture growth and rationalize their funding for essential services without disruption. This offering is based on 3 scenarios:

Based on Resilience by Design framework, there are 3 major IT focus area which will help rationalize and would create sustainable funding:

In anticipating further slowdown for next few quarters, banks and financial institutions must develop a flexible contingency plan that best equips them for crisis management and enable their customers with a seamless experience, supportive solutions, helping to accelerate their digital journey.

Author


Vishal Dixit

Vishal, Managing Director and India Head, Financial Services – India, is responsible for shaping and driving BFSI business’s strategy, technology innovations, client relationship management and successful delivery to the client.

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