These are turbulent times for humanity. As the world reels from COVID-19, the realities of how businesses operate and engage with clients are being forcefully reshaped by the dynamics of the crisis. What was previously an in-person or hybrid world has become a primarily digital, distributed world.
Even after the current crisis abates, this transformation will not reverse. Rather, COVID-19 has in some ways accelerated a change we have already been seeing across industries for the last decade.
This is especially true for the financial sector. Every pocket of the industry, from banks to insurance companies to investment groups, is experiencing this paradigm shift. Financial services leaders need a strategy to not only navigate this change but to adapt their business to thrive in the new reality.
One strategy does not fit all in this case, especially in light of the current pandemic. Banks and other financial institutions need a phased approach, with different actions guiding their business in the short, medium, and long term, to address the challenges of COVID-19. At the core of each of the phases, however, lies data. As this digital world becomes our new normal, there is an opportunity to leverage the increasing amount of data generated to better serve our customers, shareholders, and businesses.
Focus on Your Team. Make sure your workforce can stay healthy and productive in a virtual, online environment. Do they have the proper resourcing, tools, and access to systems they need to continue performing their functions?
Protect your clients. Provide loan payment, cash flexibility, and short-term liquidity. Reflect the changing customer needs in your product offering (e.g. coverage of health insurance policies, remote services, and SME protection). Stay close and support your customers also – and especially – in a remote world. Given some of your customers with a preference for physical channels may struggle, provide a thoughtful mix of call center and digital channels.
Ensure business continuity. Analyze your human and working capital as well as supply chain to ensure you are well prepared to continue to operate. Look at the health and potential risks to accounts receivable.
Priorities in the next months
Accelerate the digitalization of your customer base. Turbocharge the offering and adoption of digital services, products, and channels. Reinforce all already available digital solutions and accelerate the release of all ongoing digital initiatives. Use analytics to better understand your customers and to be able to adjust and personalize your offering and interactions. Set in place forward looking experiments to get to know the new behaviors and attitudes and adjust communication, products, and services flexibly.
Manage liquidity. Leverage your data to control funding. Review and estimate your liquidity buffer, manage cash closely, and establish a funding retention program.
Take a holistic analytical approach to credit. Establish an analytics-based, forward-looking approach to assess the Bank's loan portfolio evolution. Identify homogenous clusters within the portfolio in terms of resilience and vulnerability to the current developments, define the most appropriate set of specific actions, whilst putting in place a reinforcement of the overall credit platform.
Reduce cost base. Realize 'quick-wins' to reduce the overall cost base with a focus on highly variable cost drivers. Additionally leverage the further automation of processes and shift to digital services for efficiency increases and variabilization of the cost base.
Next level claims management. The current environment and developments will impact the volume and characteristics of claims and fraud. Leverage machine learning to increase the effectiveness and efficiency in handling claims.
There’s no denying this current crisis is disrupting business in every industry, including financial services. But this will not be the last global issue we will face. There will be more natural disasters, outbreaks, and other crises. By taking a data-driven approach, we can better adapt our businesses in the near term, navigate these challenges in the medium term, and emerge stronger, more resilient, and more customer-focused in the long term.
Bain and ThoughtSpot remain committed partners for organizations in these challenging times. If you’re interested in learning more about how Bain and ThoughtSpot can help your business address the issues associated with COVID-19, please contact: