Future of banking in the post COVID-19

02-Oct-2020 Intellasia | Tri Thuc Tre | 6:02 AM Print This Post

The appearance of COVID-19 is making big and rapid changes around the world. For example, looking back at last year, the needs of electronic implementation such as online meetings via video, online shopping, ordering food from restaurants, daily banking transactions,… cannot be as common as present.

COVID-19 is not over yet, but as the epidemic passes, the question arises as to how much of the changes will be permanent compared to those that only change temporarily. For the banking industry alone, what will change and will not change after the COVID-19 epidemic?

Kevin Martin Global Head of Operations and Digital Transformation, Personal Finance and Asset Management Division, HSBC recently shared about this issue.

The HSBC expert said that the banking industry will witness a permanent change. In fact, the COVID-19 epidemic in particular did not cause the digital transformation but in most cases the disease simply accelerated the process of implementing this route. Over the years, customer behavior has transformed as more and more people are using digital ecosystems to shape their own lives. The banking industry is part of this shift, but in most cases the banking industry has not played a pioneering role in history.

Research data shows that, after the COVID-19 epidemic, approximately 71 percent of consumers globally each week use digital banking channels a three percent increase over the same period last year while usage daily increase six percent over the same period. The number of monthly mobile banking users in Hong Kong has shown a sharp increase nine percentage points between the first half of 2019 and the first half of 2020 an increase of 74 percent to 83 percent of respondents.

HSBC experts have also made some predictions about what the banking industry will be like after COVID-19. Kevin Martin said that after COVID-19, more and more banking transactions will be done through digital platforms.

The reality, converting operations to digital is unavoidable, including: checking balances, making payments and transfers, paying bills, even signing up for a credit card. Many of these activities are habits, and once a habit has been formed, it is difficult to change. In the post-COVID-19 era there will even be more people doing regular banking through digital features.

Second, customers will still visit branches and transaction offices at key milestones in their life.

Even when the COVID-19 epidemic is gradually controlled, people still have the mentality of needing human-to-human interactions at critical moments in their lives. People want peace of mind when discussing important matters such as sending their children abroad, managing intergenerational transfers, creating a wealth management plan, losing or owning a home…. This means we can expect some “normal” activity again after transaction branches and transaction offices will continue to take up a significant share of this type of interaction. What remains is to see how people are willing to use video platforms as part of this interaction depending on a few factors such as whether the social distancing prolong. For a few reasons, people will appreciate the convenience of a branch close to home compared to a scheduled video call. However, the increasingly common use of Zoom can promote how face-to-face meetings happen.

Third, bank branches will be more like waiting rooms for service. The look and feel of branches and transaction offices will change. Tellers who help customers with day-to-day transactions transactions that are currently done online are less likely to be done at the branches. Branches and transaction offices will be like service lounges. The presence of a banker is just to assist customers with transactions on their own device, and the space will be divided into more cozy seating areas for private spaces. Changing the design of branches and transaction offices in this way will also support any social distancing possible.

Fourth, digital collaboration will accelerate. Because of the COVID-19 pandemic, regulators and banks worked together to rapidly assist clients in maintaining banking during the early outbreaks examples of which include synergies to increase the availability of video banking in select markets. We anticipate that this partnership will continue as the roadmap for digitalisation grows and evolves into new areas such as AI and machine learning.

Fifth, the long-established banks will be more and more like the new technology banks (challenger banks) than they are in other markets in the domestic market, and the partnership will be strengthened.

Accelerating the digitisation of customer services also fosters an increasingly close partnership between banks and digital platforms, such as online retailers and social platforms. Based on this partnership, customers can make banking transactions anywhere, anytime, whether they’re preparing to spend or socialising.

“Separately, we are now seeing new and powerful digital players enter the retail banking market worldwide. However, we also expect that when digital platforms are to be. Expanding more, established international banks will begin to challenge with digital-centric services both inside and outside their domestic markets, “said Kenvin Martin.

For the consumer, both of these changes will have a very clear benefit: more consumer choices. For long-established banks, this is an opportunity to compete in markets, segments and new markets.

“We are not sure whether after the COVID-19 epidemic everything will return to normal as it was. The COVID-19 epidemic has turned us all into one society that can deal with a wide range of solutions to family problems to support everyone to live well throughout the season. But while some parts of service industries like banking will change, the human element will persist especially when complex and reassuring matters are involved.”, said Kevin Martin

 


Category: Finance, Vietnam

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