Has COVID-19 Catalyzed Banking Innovation? What are the Challenges and Opportunities that Remain?

The year 2020 with COVID-19 at the forefront had been transformative for the banking industry. Banks had no other choice than to quickly arrange for an increased volume of online services due to the lockdown and restrictions on in-person service. This resulted in an influx of customers who formerly visited branches to shift to digital banking for the first time. Consumers who previously engaged in banking digitally for paying bills or transferring money increased their online activity notably.

As a result, banks are expanding digital services and cutting costs to retain their customers, form digital bonds, and strengthen the newly built relationship with customers even after the COVID passes. Though this doesn’t imply the end to in-branch banking, online services are undoubtedly the wave of the future.

Banks and the Digital Capabilities

Banks have been promoting digital capabilities for years, but the COVID crisis propelled the issue to the forefront, creating a need for fast action. It has forced banks to deal more quickly and definitively with the digital challenges such as communicating with customers, security, and offering end-to-end services that customers demand, ranging from faster digital customer onboarding to seamless lending services and more.

By now, after months of changes, both customers and banks have apparently got the idea of leveraging digital services for all financial and banking needs. Several research firms have also noted the same. For example, in a survey, Deloitte has found that 35% of customers have increased online banking engagement during the last 10 months of the pandemic, helping the industry realize the digital promise in banking. Another study by McKinsey found that COVID has accelerated the developments in digital adoption that were expected to take five years to weeks.

Here are some examples of how banks are changing:

Improved Security

Banks have invested large sums in cybersecurity, but even the robust security systems can fail because of the sudden rise in digital transactions caused by COVID. As the number of online customers grows, banks are leveraging technology for upping their defenses to protect sensitive data in the face of the ever-evolving attack landscape.

Better Digital Experience

COVID hasn’t changed banking much for the tech-savvy customers, but the customers who prefer in-branch banking have to undergo a practice adjustment. As a result, banks must redesign their digital approach to make services more intuitive for customers who are newer to the digital landscape.

New Service Opportunities

Any change in the bank and customer engagement impacts the bank-customer relationship. Thus, the banks that are providing the best user experience, service, and other features are the ones that will be able to retain and gain customers more customers post COVID. Though end-to-end online capabilities take time to develop, banks that want to retain their customers know that they don’t have any time to lose.

In 2020, banks realized that innovation and digital transformation have gone beyond a mere value-addition. They have become essential for banks to survive and for their future growth opportunities. Customers are expecting not just safety and stability but also convenience, which has made digital banking solutions more important than ever.

Banks seeking a promising Fintech platform to tap the expanding customer base with a growing preference for convenience and accessibility can explore opportunities with Arttha, a Unified Fintech Platform. Arttha has been helping banks to translate their offerings into profits by becoming more accessible to the customers.