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COVID-19: An opportunity for financial sector to expand digital transformation

A sudden epidemic swept across the world, and it had an impact on our lives, work, and even the production and management in all walks of life. This chaotic impact of COVID-19 has affected financial markets and consumer behavior all along.  Although it is still early to evaluate the impact of the pandemic on the global economy, it is sensible to assume that there are still downside risks posed by the outbreak given its unknown magnitude and duration.

 Also Read: COVID-19 Pandemic – What it holds for businesses?

Experts believe that the epidemic will eventually pass, but the impact it brought to us will last for a long time. However, in the long run, this crisis can also be transformed into an opportunity for the financial industry to enhance business through technological flexibility and further deepen digital transformation.

Nearly after a decade of the last global recession, the global financial industry has made considerable progress in building business continuity. 

How did the Financial Sector adapt to the innovations after the 2008 global crisis?

On the basis of having disaster backup and recovery capabilities that meet the basic regulatory requirements, many financial institutions have further improved the availability of information systems by building multi-site technological architecture. 

Additionally, with the development of Financial Technology (FinTech) and the deepening of digitalization, the customer service model of the financial sector across the globe has completed the transformation from outlets to online and mobile banking, and some leading commercial banks have even reached more than 90% to digital banking. Business replacement rate and mobile channels such as mobile apps and WeChat have become the most used and most convenient service channels for retail customers.

In this outbreak, banks and other financial institutions have further used platforms such as video and WeChat to explore contactless business and customer service models.  The crisis has intensified the need for digital transformation. Taking this as an opportunity, the financial institutions should rethink further development towards remote and digital banking.

What financial institutions can learn from the global breakout? 

Financial institutions can learn a lot from the current outbreak and economic recession. Here are some of the areas that need to be focused:

Adopting SaaS, PaaS, IaaS Platforms 

At present, most banks have established private cloud-based platforms using Software as a Services (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS) solutions. In terms of applications, 26% to 50% of front-end processing and customer contact applications has been provided based on cloud platforms. Public cloud has broader and more flexible application prospects and supports the digital reshaping of financial institutions.

In the future, financial institutions can focus on using public cloud SaaS products to provide agile tools and integrate with business operations, such as marketing and human resources, office, financial and other background services. 

Using new technologies to enhance IT development maintenance

With the continuous deepening of digitalization and agile transformation, most banks have established a relatively complete development, testing, operation and maintenance integration (DevOps) system. At present, due to the need for epidemic prevention and control, and in the future when the flexible working model is more widely adopted, it will be necessary to consider the needs of remote development and testing collaboration and off-site operation and maintenance.

Specifically, we can consider introducing new tools and technical means to enhance the flexibility of development in operation and maintenance under the new working mode, such as remote collaborative development and inspection robots in computer rooms.

Introducing digital employees to increase labour flexibility

The outbreak of the new coronavirus epidemic has brought the proposition of how to reduce manpower input and improve the efficiency of automated processing again on the priority agenda.

Unlike automated tools, digital employees are combined with RPA tools and cloud, AI and other digital technologies, and can work independently or collaboratively to complete work tasks. The future work team will be a mixed workforce model composed of digital employees and human employees. This will require the transformation of human employees’ cognition and skills, as well as the upgrading of labour-management models.

Also Read: The power of Robotic Process Automation in Banking Industry

Promoting contactless finance, to enhance customer experience and increase business outreach 

From vigorously developing digital banks to a mobile-first strategy, most of the FinTech institutions are at an internationally advanced level in terms of online services and mobile services. In this epidemic, the remote service model of financial institutions has been further developed, providing customers with “contactless service” channels and safe and convenient “at home” financial services.

The remote service model based on mobile terminals and video, combined with AI technologies such as biometrics, video analysis and identity verification, and natural language processing, can further expand the business scope of remote services on the basis of meeting regulatory compliance requirements, such as risk assessment, customer information maintenance, due diligence and corporate credit business.

Wrapping it Up

Seventeen years ago, the SARS epidemic raged, triggering changes in retail and corporate transaction methods, making the e-commerce industry hit hard after the Internet bubble burst in 2000, and ushered in a golden period for the comprehensive development of e-commerce in China. Today, the spread of the New Coronary Pneumonia epidemic worldwide has also brought historic development opportunities to the financial industry. 

As the blood of the global economy, the financial industry should take the crisis as an opportunity to use the advantages of financial technology to enhance the flexibility of its own business, in-depth digital transformation and business innovation, support the recovery and development of the real economy and build itself as an innovative, intelligent, agile and efficient sector.