Nobody in the banking industry planned for a year like 2020. The list of Covid-19 repercussions is almost endless and includes supervisory and compliance functions that were never designed for remote work: closed branches; overwhelmed call centers and digital channels; near-zero interest rates; greater credit risk and default rates of corporate and retail customers; economic contraction; increased loan loss provisions; and profitability pressures.
At the same time, Covid-19 presents opportunities for business leaders in the banking industry and beyond to develop strategies and branding that will define their future, as distinct market forces and customer behaviors will certainly emerge in the “new normal.” The uncertainty from Covid-19 will remain for the foreseeable future, and businesses need to be hypervigilant and rewrite their playbooks as circumstances evolve.
Many banks have leveraged digital technologies like cloud computing, robotic process automation, artificial intelligence, and chatbots in response to Covid-19. Some of these solutions were set up in a matter of days, providing immediate results to drive operations forward. The Paycheck Protection Program (PPP) is an excellent example of how banks leveraged technology to meet customer needs. Although the execution wasn’t always perfect, banks that used technology to help small businesses speedily verify details and documents, streamline loan applications, and stand up mobile PPP loan applications fared better than banks that sat on the sidelines.
Covid-19 caused customers (and banks) to rely more heavily on digital channels and fintech apps. Engaging and supporting customers digitally means reimagining distribution and customer relationships during times of social distancing and lockdowns and providing more personalized services. But these changes will have impacts on back-office and contact center operations, and banks face two strategic challenges.
First, leaders need to better understand what’s happened and how many of these changes will remain when things return to a more familiar environment. Second, it’s important to determine what specific capabilities need to be developed for the future.
This isn’t as simple as it sounds – and certainly not as simple as moving full speed ahead on digital investments. Research from BAI and Visa subsidiary Plaid suggests greater reliance on digital channels will continue after Covid-19. Yet, the country’s largest bank, JPMorgan Chase, isn’t necessarily convinced it should abandon its aggressive branch expansion into new markets. “It is true that we’ve done some reprioritization to accelerate certain things in terms of our digital capabilities…given customer needs through the crisis,” said Jen Piepszak, JPMorgan’s CFO, at a recent conference. “But broadly speaking, we haven’t changed our priorities.”
Using the pandemic as a springboard to improved engagement
So, how can you utilize Covid-19 as a catalyst to improve digital customer engagement? Instead of trying to do it all at once as a response to a crisis, you should prioritize capabilities that are critical to attracting, acquiring, and engaging new account holders.
Mobile end-to-end account opening is one of those areas. Banks have seen a 14.5% increase in online account openings since the onset of Covid-19, compared to a 9% increase in 2019. Only 40% of banks provide end-to-end account opening with a mobile device, while 72% offer online/website account opening. Although most banks offer digital account opening of some type, the reality is that almost 30% of customers will still need to visit a branch to complete the process. If you allow consumers to initiate the process online or on a mobile device but still require a branch visit for signatures, documentation, ID verification or funding, you don’t have the customer experience as a top priority.
To learn more about the importance of digital account opening in the touch-free Covid-19 era and the top 10 questions you should ask yourself when evaluating your capabilities, download our perspective here.