Seemingly overnight, the COVID-19 pandemic has transformed the world of banking. The effects of the virus and the subsequent stay-at-home orders have ushered in a new era in financial services. While there was an increasing focus on digital transformation in banking before COVID-19, there’s a new sense of urgency for community banks, many of which are still dependent on in-person experiences and legacy technology. By adopting next-generation tech and partnering with fintech leaders, community banks can shift away from outdated standards. This will be critical not only for their sustained success – but their survival.
Banking as we know it may never be the same. The disruption created by the pandemic caused a dramatic decrease in visits to bank branches, according to Novantas. Many banks have had to close significant portions of their branches, a decision which may have long-term effects on customer behavior. Live Oak Bank’s latest Business Pulse reveals that businesses are pivoting too— 46% of middle market companies have become more open to branchless banking as a result of the pandemic. Another unforeseen impact of the crisis has been the shift away from using physical forms of payment, including cash and paper checks. Consumers are leery of using anything that potentially could spread the virus, and many retailers are discouraging these forms of payment for the same reasons. This is driving a decreased dependency on these types of payments, arguably archaic in today’s world.
It’s safe to assume that in a postpandemic world, digital banking channels will become more widespread. Mobile banking apps saw unprecedented use as a result of the pandemic. According to J.D. Power, nearly 84% of retail bank customers had at least one digital interaction with their bank between April and June 2020. The industry is poised to change with a forward push towards electronic payments, including traditional debit and credit cards, plus virtual cards, real time payments like ACH and peer-to-peer transaction channels like PayPal, Venmo and Zelle. During the second quarter of 2020, PayPal added the most net new active accounts in the history of the company.
The time to act is now. Community banks must begin to increase efficiency in their banking platforms in order to keep up with the amplified attention on digital. By driving adoption of API and cloud-based methodology, banks will be able to keep up with the pace of digital innovation that consumers experience in other areas of their lives. Banks can seek partners to deliver these services, not vendors. In order to deliver clean, simple user experiences, it’s imperative to provide tools to help train the customers – this will bolster the customer journey and overall satisfaction.
The pandemic of 2020 has been the catalyst for change across all ways of life, but especially how we interact with essential services like banking. Community banks can and should seize the moment of digital transformation. The role of online and mobile banking will only continue to grow in our daily lives. Sustainability equates to agility these days. Banks must be able to adjust to growing consumer adoption of digital channels or else they’ll become irrelevant. CXOINSIGHTS 41 JULY 2021 I n 2020, financial institutions were thrust into the spotlight with the onset of the COVID crisis, needing to respond to unforeseen circumstances in an instant. Despite some hiccups, the banking industry’s collective response to the pandemic thus far has been notable by going fully virtual and executing an untested operating model in a short span of time. The pandemic has reshaped the global banking industry on a number of dimensions by accelerating digitization in almost every sphere of banking and capital markets. In addition to a range of new financial needs, particularly around liquidity, for many retail and business customers, the crisis has ushered a new competitive landscape, stifling growth in traditional product areas, prompting a new wave of innovation and recasting the role of branches. That said, it is imperative that banks strengthen their cloud-based platforms and infrastructures to costeffectively modernize core technology systems in order to elevate customer engagement and improve efficiency through compelling service delivery models consisting of digital and human interactions. A fast-growing fintech software provider, Backbase, is empowering financial institutions to accelerate their digital transformation and effectively compete in a digital-first world. The company’s omni-channel banking platform is a state-of-the-art digital banking software solution that unifies data and functionality from traditional core systems to enable new fintech players to provide a seamless digital customer experience. “We believe that superior digital experiences are essential to stay relevant, and our software enables financials to rapidly grow their digital business,” - Jouk Pleiter, CEO of Backbase. Backbase’s end-to-end engagement banking platform enables fintech companies to modernize and orchestrate customer touch points, transforming multiple siloed banking channels and legacy applications into a consistent and seamless brand experience. The company allows users to repurpose existing business applications by incorporating their content, data, and functionality into new digital customer experience layers to deliver a unified and seamless customer experience across any device solutions. It’s out-of-the-box digital banking solutions to help financial institutions jumpstart their digital transformation and optimize functions for retail banking, commercial banking, wealth management, and insurancespecific scenarios. Backbase’s end-to-end engagement banking platform enables its users to leverage industry best practices, and readyto-go implementation accelerators significantly decreased time to market. ‘We have invested in many years of R&D to provide the exact editing and digital marketing tools to take full control in optimizing the customer experience, resulting in more sales conversions,” - Pleiter. Founded by Jouk Pleiter in 2003, a digital entrepreneur saw that banks were struggling with their digital transformation. The solutions appeared clunky and different operations of the banks operated in a disjointed way. As a result, he decided to develop to help banks digitize their processes. Today the company has over 1,000 employees, of which 50 per cent are focused exclusively on product development. Over the years, the company has acquired a strong global client base and has worked with banks in developed markets such as Europe, Canada, Japan, New Zealand, and the US and as well as new markets such as Kenya. “We enable financial institutions to achieve the speed and flexibility to create seamless customer experiences across any device, and deliver measurable business results,”- Pleiter. Backbase The End-to-End Engagement Banking Platform We believe that superior digital experiences are essential to stay relevant, and our software enables financials to rapidly grow their digital business Jouk Pleiter DIGITA