COVID has caused Banks to fundamentally remodel everything

Akhil Handa, Head – Fintech, Partnerships, Mobile Banking & Digital Lending, Bank of Baroda

Post COVID-19, the world around us has changed forever. In a matter of weeks, work from home (WFH) became the norm, not the exception. The virus has forced us to rethink how we view work, undertake travel, and engage with the ecosystem and a proliferation of technologies that make these possible.

When COVID-19 took hold, necessity dictated that all organizations ‘become digital’. Like demonetization accelerated the digital payments adoption by 2 years, COVID-19 is expected to accelerate the digital adoption by 1-2 years as well, depending upon how long the pandemic lasts or how long the vaccination process takes. In fact BFSI organizations, classified as Essential Services under the Indian Central Government Order, have been driven to hasten the grouping of men, material and technologies with digital at its front and core.

In much of the pre-COVID-19 era, BFSI digital transformation was driven by the desire to enhance customer experience with the use of data and advanced analytics, front end innovation and technology. What was missing was the urgency to rapidly transform, which has changed with COVID-19. We are sure to look back on this period as a tipping point between the fence sitters moving up the digital adoption curve.

A World That Became Digital Overnight ….

Before COVID-19, the banking industry did a great deal of talking about ‘becoming digital’, but less than 15% of BFSI organizations considered themselves digital transformation leaders. When the pandemic hit, everything changed overnight. For those organizations that were not prepared, new business opportunities were lost, customer satisfaction suffered and employee productivity dramatically dropped.

Broadly there have been two parts to the solving for this, i.e. increase digitization for:

  1. Internal processes
  2. Customer facing process and service delivery

Internal Processes: This involves improving seamless and secure remote operational capabilities including IT operations, security, enabling hybrid cloud and data centre infrastructure. To complement this, we need productivity and collaboration tools such as video calling, remote attendance marking, project tracking, document sharing and management application, online proofing.

Customer facing process and service delivery: This is trickier as it involves balancing technology adoption with the customer’s requirements of also being able to physically walk into branches and discuss matters with officers of the bank – especially in the rural/semi-urban parts of our operations. However, in terms of digital delivery readiness – we estimate there are over 200 services a retail bank branch offers – and each of these services – barring a few physical ones, could be delivered electronically through M-Banking, Internet Banking and Contact Centre. In fact, even the Contact Centres can now be manned by Voice Bots and no longer require the first level of human contact, which was generally relayed over the IVR setup.

Further, the asset creation processes also needs to move digital for that is where the customer is expected to be. For the same purpose, Bank of Baroda has created a Digital Lending Department to consolidate all digital journeys across Retail, MSME, Agri and Fintech into one core corporate vertical. This can lead to almost 90% productivity gains as per our internal calculations.

But it requires a huge effort for human skill development for there are new job families that need to be created. For instance, this requires officers to:

  • process different kinds of data points such as credit bureau records, bank account records, social media activity and public records to assess users’ creditworthiness more quickly
  • pre-empt defaulters and fraud by analysing a variety of data points like income levels, demographics, credit history, payment history, usage patterns
  • automate and speed-up loan application processes using advanced analytical models
  • provide personal wealth management services, improving credit health and improving savings through through robo-advisory services
  • deliver personalised banking and digital marketing

Once we have successfully setup the new processes, we have to take a good look at every job role- in administrative offices, customer facing roles, and need to fundamentally challenge the assumptions.

Change … Has been in the making for a while now:

Many traditional physical banking skills like tellers, branch customer service officers, loan processing officers were witnessing a paradigm shift in the pre-COVID-19 era itself. In the evolving context, traditional banking skills will be required to be upgraded to digital skills.

As we look to the future, some workers will return to the traditional office when the Coronavirus crisis subsides. But ideally many should not be required to. We believe offices will not die out completely. But the notion of spending 60 – 70 hours a week in offices will. The office was a product of the Third Industrial Revolution. The fourth one really took off as the virus hit – and the office could be a casualty.  So will be many ways of performing work.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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