Pace of change is something which is often talked about in the VUCA world, mainly linked to the need for agility in business and adoption of Technology. The recent crisis, perhaps the biggest crisis of our generation, being a Black Swan Event, has brought in a new dimension to it. The businesses over the world are fighting the impact of the global pandemic caused by COVID-19. One thing for sure is that - this storm would have changed them forever.
The New World – What’s lined up ahead!
Economy & workforce: COVID-19 impact will hit the world of work from multiple directions and companies would find it extremely difficult to sustain in this environment. Tough decisions - cutting down the salaries, pink slips to employees, etc. can be expected.
Surveillance and Monitoring: New surveillance tools (smartphones to track movements, apps to warn proximity, etc) used to tackle COVID-19, combined with biometric data, AI, and algorithms, will enable us to track, monitor, and even manipulate people. Corporates will adopt similarly was to track and monitor people and the existing processes (engagement, attendance, analytics, etc.) will start looking like something from the Stone Age.
The way we work: WFH will become the new norm and will invade Banking space as well. The digital affinity and behaviors developed by customers at this crisis, coupled with technology and digitalization will force the Banks to revisit the traditional Brick and Mortar Branch setup and procedures. Technology will also enable virtual interactions with customers without losing the human touch. All this may be enablers for creating different ways of doing work, breaking all stereotypes.
Digital Fluency and Behaviour Traits: Even the most brick and mortar organizations have been forced to experiment with working remotely and are now ‘online’ and working from home. This will make an investment in enabling technologies like cloud, data, and cybersecurity a prerequisite for Companies. Consumer behavior will also shift with preference weighing more towards online and digital platforms.
Health and wellness: People and Organizations will have a renewed outlook and focus on health and hygiene aspects. Social distancing, avoiding handshakes, stringent checks on people, etc. are likely to come to center stage. People’s perception and preference will change and people will have reluctance in accepting physical documents.
Re-Imagining " To thrive in the New World"
- Shorter Perspective: Returning to Business As Usual
- Safety & Trust: Ensuring the safety of employees and all other stakeholders should be the top priority in addition to returning to BAU and gaining the trust of employees/ customers. Normally, trust cannot be built overnight. However, in a moment of crisis, minds too can change quickly, and hence, now is the right time to build Trust.
- Communication: Develop exclusive Communication Strategy and enhance channels to engage with all the stakeholders and specifically develop ad hoc channels to manage and overcome temporary disruptions.
- Profitability: Multiple factors will test the Banks profitability in the coming Quarters and will put it under tremendous pressure. All possible efforts (lowering the cost of funds, booking profits from SLR portfolio, cost optimization, digitization, squeezing other income streams) should be taken to offset these challenges and to retain/enhance profitability.
- Stress: Impact of the heightened delinquencies, may surface by Q2 and Q3 of FY 21 and all major industries are likely to face the wrath of COVID 19. The adequate focus must be laid on addressing these challenges. Additionally, collective efforts should be made to seek regulatory approvals for one-time restructuring or relaxation in asset classification
- Recovery: Focus should be given on revamping digital channels for recovery processes. This may be the right time to think about creating a digitalized Operational Models for collection and recovery.
- Cost: All possible cost-saving measures, be it reducing paper usage, reduction in electricity consumption, avoiding travel or strategic calls such as pay cut, should be adopted.
- Longer Perspective: Seven ways to consider crisis as an opportunity to do things we could not do before
- Creating a flatter organization with a matrix structure for agility, swiftness in decision making, and faster response to the crisis.
- Rationalize costs on an ongoing basis: Centralization, reducing brick and mortar setup and its related overhead costs, going digital, Employee Cost, etc.
- Promoting virtual work, extensive use of collaboration tools, and changing the way we work.
- Transforming: Work (humans with machines), People (getting right Talent and reskilling/upskilling existing Talent) and Workplace (Optimal blend of the physical and virtual workspace)
- Reinforcing hygiene, wellness, and healthcare.
- Permanent Crisis Management Team to be developed and their scope to be made broader.
- Developing a strong policy for ESG and become a Socially Responsible organization.
While it may be early to foresee a post COVID-19 Era, especially since we are facing an uncertain future, it is important for Banks to keep tackling the challenges on an ongoing basis to stay relevant and to continue business as usual. Equally important is to take the long view. Banks must sustain the momentum gathered in breaking stereotypes (even though out of fear and desperation) and keep improvising. In short, by the time, COVID-19 situation is past us, the crisis should be used as an opportunity to do things that we could not do before and create a gamut of New Normal that will shape the future of Banking.