How Can the Banking Industry Emerge Stronger from The Covid-19 Pandemic?
Around the world, many countries now face a new period of uncertainty caused by the Covid-19 pandemic. While regional lockdowns had temporarily started to ease, the prospect of a second wave has caused some countries to reintroduce restrictions – a situation which may be ongoing and become a ‘new normal’ as part of the global effort to combat the virus.
Amid these challenges, society has been forced to digitalise many of its core functions at an unexpectedly fast pace, sparking unprecedented levels of innovation in a short space of time. This has led to an emergence of new digital services and triggered the transformation of key sectors including finance, education and healthcare. With growing levels of unpredictability around how the pandemic will unfold, there is a societal expectation that access to comprehensive digital services will continue and improve.
This expectation is particularly prominent in the banking industry, which rolled out an expanded range of digital services during the early stages of the pandemic to enable customers to manage their finances safely from home. New services include virtual appointments, expanded features for mobile banking and streamlined authentication processes for customer service. As banks look ahead to the future, Mobey Forum is drawing upon its Expert Groups to identify the key considerations for the industry.
A new era for online banking
The Covid-19 pandemic sparked a huge surge in demand for online banking; the United States is reported to have seen a 200% increase in new mobile banking registrations in April 2020, which is reflective of a broader global trend. Similarly, in the retail industry, there was a significant increase in the number of consumers using online shopping for the first time, and future ecommerce purchases from new or low frequency users are expected to increase by 160%.
While the increase in online banking services was driven by the urgent requirement for people to manage their finances without leaving home, many customers have since recognised the convenience of online access, and are calling for more comprehensive digital banking services. The pandemic also prompted many within the older generation to access digital services for the first time.
“The Covid-19 pandemic has encouraged banks to invest more time in developing tools which allow customers to manage their finances remotely. By ‘remotely’ we mean allowing customers to access their banking information independently without any third-party support,” says Mario Brkić, co-chair of the Open Banking Expert Group at Mobey Forum. The emerging social and behavioural changes caused by the pandemic require banks to undertake a careful evaluation of which financial matters can be managed in-person, and what can be dealt with online.
The digital identity opportunity
As well as rolling out new digital services, banks now have an opportunity to respond to the growing demand for digital identity. The pandemic has triggered a sharp increase in customers needing to verify their identity online: “During the Covid-19 pandemic, more people are relying on digital identity schemes than ever before,” says Jukka Yliuntinen, co-chair of the Digital ID Expert Group at Mobey Forum. “As an example, usage has increased in the UK where digital identity is required to access government benefits, and it is a similar situation across many of the Nordic countries.”
Mobey Forum has explored this opportunity further in a new report, entitled The Mobey Long Take – Post Covid-19 Digital Identity, which outlines why banks are in a unique position to seize the opportunity presented by digital identity, and indeed are best placed to lead the discussions and implementation going forward. Throughout the Covid-19 pandemic, banks have played an important role as a distribution mechanism for many of the government intervention and support strategies. They must now seize the opportunity to take this a step further and lead the development of a fairer, more trusted approach to digital identity.
A rise in customer data
With more customers utilising digital services, banks also have an opportunity to use the data to drive additional value for customers. However, this approach is not without challenges: “Data privacy and machine learning fairness are two of the most complex data-related challenges for banks,” says Amir Tabaković, co-chair of the Data Privacy in the Age of AI Expert Group at Mobey Forum. “On the one hand, banks need to innovate using technology and they must become data-driven to do that. On the other hand, trust is the biggest asset for banks,” he adds.
Banks have a long history of credibility and trust and their ability to demonstrate this through the secure management of customer data will be critical to creating confidence in new services. In rolling out new services, banks also have an important responsibility to ensure they remain accessible to all demographics. By sourcing feedback from the newest users of digital services – specifically those who are using them for first time – banks can test if their design is intuitive to customers.
Covid-19 has irrevocably changed consumer habits and expectations. As we navigate the path forward, banks have a window of opportunity, to reflect on the learnings to date and use them to build a digital-first banking ecosystem which will serve customers for the years ahead. It is through this forward planning that the banking industry can help the global economy emerge stronger than before.