Financial Services: Digital is the New Normal
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COVID-19 has changed the way people work, shop, socialize, do their banking, and make payments. Consumers are promptly embracing digital options. As the pandemic continues, the long-term implications of these behavioral shifts are being discussed.
The financial services sector is treading unknown waters. A sharp decline in branch visits and an exponential jump in virtual interactions have thrust the digital capabilities and customer experiences of banks and insurers under a glaring spotlight. The World Health Organization (WHO) recommended contactless payments versus cash, as a way to limit the spread of the virus that may stick on paper currency. The already ongoing global adoption of digital banking and insurance is now on steroids as the pandemic supports the criticality of fast, secure, straightforward access to funds, protection, assurance, and financial information.
Individuals, governments, and businesses are embracing digital payments—a behavior change likely to continue once the crisis is over. Consumers have shifted their financial interactions to online channels. They are making insurance claims through self-service mobile apps, meeting remotely with investment advisers, paying for everything through either virtual cards or with plastic in hand during short visits to essential stores that remain open.
In a webinar by Entrepreneur India, experts from the financial sector with moneyed experience discuss how the pandemic will change the way business models are conceptualized and to provide a rapid and coordinated response to support the economy, maintain financial stability and minimize the risk of market collapse.
Archit Gupta, Founder and CEO, ClearTax
Fintech companies that are geared primarily towards mobile platforms excel in providing services such as underwriting, presentation, data visualization, etc. They will help set the right context for transactions. Their capabilities will gain more relevance once more, and more people will start adopting digital channels for payments.
“Adoption of cloud and scalable technology architecture, cloud-based solutions, and blockchain technologies is something that will help fintech organizations to withstand the challenges being posed by the outbreak so that they can continue to operate seamlessly and effectively,” says Gupta.
“Fintechs are undoubtedly part of the solution to the problem,” affirms Gupta. The expert maintains that in the post-crisis scenario, banks should continue their commitment to strengthen ties with the financial technology ecosystem, from which new opportunities for the financial sector will keep emerging.
The need of the hour is to keep users well-informed about their current financial situation as well as empower them while providing options to plan for their future. It is a crucial element when many are struggling with the uncertainty of job security and stay-at-home orders. The key priorities should be to maintain service and support for customers in the changing times.
Shashank Kumar, CTO and Co-Founder, Razorpay
The pandemic is proving to be a disruptor for financial businesses and more so for insurers and e-commerce traders and is a strain on their financial risk analysis, operational risk analysis, and business continuity planning.
As an impact, Kumar recommends that they can expect to be swamped with general re-educational queries and claims over the matter across multiple lines, whether that be for health, life, or non-life cover. All agencies and analysts need to examine financial risks and their impact on the cost of capital.
Gaurav Chopra, CEO and Co-Founder, IndiaLends
Due to the remarkable shift in the market environment, firms and banks may have to re-examine their trade model evaluation for their available monetary devices, said Chopra.
Throughout the unpredictable weeks and months ahead, the crisis-sparked surge in digital activity is bound to generate new customer habits that require banks and insurers to function online.
Companies in the financial sector need to supervise the current and potential effects of COVID-19 on their businesses and financial reporting. Quickness in providing trustworthy information through meaningful disclosures in the financial statements is important to maintain trust. The financial reporting issues with respect to credit risk assessment, liquidity and fair value, hedging strategies, loan agreements, and mortality claims would need careful considerations.
“It will become the primary channel customers use to engage. Each day of confinement promotes digital use. And that begs the question—Are financial services incumbents ready to prioritize digital capabilities and offerings for success in a virtual world?” says Chopra.
The journey to the new normal includes modernizing the application portfolio aggressively, migrating to resilient and secure clouds, embedding security and compliance across operations, driving the digitization of processes into intelligent workflows, creating self-serve capabilities, and re-inventing a new relationship with customers.