A rapidly evolving landscape means significant opportunity for transformation
With the release of Efma Review 2020, Efma’s new CEO, John Berry, outlines the major trends that are shaping the banking and insurance industries amid a period of major upheaval.
The coronavirus has caused a major impact on all of our daily lives. It has far-reaching implications for the financial sector – for staff as well as customers, let alone the very structure of businesses. So many elements of day to day activities are having to be entirely re-thought as a matter of urgency. The role of Efma at this unprecedented time is to assist you through our extensive insights, sharing, and learning from other likeminded financial players facing similar challenges across the globe.
We are already actively supporting many members through engaging workshop eCouncils and focused webinars. We will continue to refine our strategy as we seek the best ways to connect, engage, and inform our members.
1. The future of work, now
The future of work is a subject that has consumed businesses, organizations, and governments for many years. With the advent of disruptive technology making new working paradigms possible, people have wondered just what form work will take in the future. Now, a pandemic that is dramatically restricting human-to-human contact is likely to usher in the future of work much quicker than anyone anticipated. As people are forced to work from home and conduct their lives remotely, financial institutions have two concurrent challenges: maintain, motivate, and optimize their workforces while also continuing to innovate and deliver value, digitally, for their customers.
2. Future business models in financial services will be more digital-dependent
Open banking and open insurance were already creating new opportunities for institutions to rethink business models. This event will serve as a catalyst for further digital dependence. Open data gives customers more control over their financial data. Executed well, open banking and open insurance will deliver mobility, inclusion and new distribution channels. Several different approaches coexist in different geographies. For instance, in Asia the open platform strategy shows more industrialization and can quickly onboard partners thanks to API. In the USA, we observe a wide range of advanced collaboration tools like API store and development test platform in collaboration with big tech. In Europe, there is more in-depth collaboration with scale-up companies and the PSD2 regulatory framework.
3. Payments - contactless or bust
Countries and their citizens had already been adopting contactless payments to varying degrees. Now, people are increasingly wary of handling dirty bank notes and merchants are shifting rapidly to only accepting contactless payments. Most major banks and neobanks have already incorporated ApplePay and GooglePay functionality into their offerings, but the current situation will force laggards to speed up their adoption of this new trend. While some countries, notably in Scandinavia, already have widespread adoption of contactless payments, many others are still heavily reliant on cash. This virus, and the nature of its spread through droplets on surfaces, will force countries to reduce their reliance on cash. Financial institutions must follow suit with reliable payments services.
4. The future of digital banks and neobanks: a major opportunity
Neobanks have long touted their ease of use and convenience as differentiating factors. These core features are the result of new business models and digital tools that aren’t beholden to legacy technologies. Now, with millions of new customers needing to manage their finances remotely, this presents an opportunity for neobanks to promote their core competencies. Pre-pandemic, 64% of customers stated they feel confident transacting with digital-only banks and want to become a member of a community. Digital banks, through elevated levels of customer experience and service, can create a stronger sense of community, loyalty, and convenience in our new reality.
5. The future of contact centers: customer engagement hubs
Banks and insurance companies have shifted their customer services to contact centers where people can interact remotely by email, chat, or phone. These new customer engagement centers are based on knowledge management systems (KMS), webchat, tutorial video, built-in chat and mail apps on top of phone and interactive voice response (IVR). These new means of interacting with customers are only becoming more critical as banks will need to find alternative ways to serve and engage their customers.
6. The criticality of the financial services industry
Due to their prevalence and role in society, financial institutions have a key part to play in addressing this pandemic. In recent years, we have seen social responsibility and sustainable business models become top priorities for many financial institutions. In light of this pandemic, it is time for banks to demonstrate clearly their commitment to their sustainable principles. They can do this by guiding, supporting, and leading their communities.
Download your free copy of the 2020 Efma Review