How will financial institutions adapt and thrive in the post-COVID world?
In an interview with Finextra, Banking Circle CEO Anders la Cour discussed how financial institutions can utilise the lessons of the past, how the COVID-19 pandemic has impacted the need for digitisation, and why collaboration is key to delivering the best solutions.
COVID-19 and digitisation
While COVID-19 has had a considerable impact on how financial institutions are delivering their services, the need to digitise has long been a priority for banks.
“What we’ve seen over the last 10 to 15 years is that banks are well aware that they have to be increasingly digital to compete in a modern world – that journey actually started a while ago,” said Anders la Cour. “Many of the larger banks do come with technology legacy, which they are well aware of. I think COVID-19 has just accelerated that trend.”
Banking Circle’s recent research reveals that technology infrastructure is an integral focus for the vast majority of financial institutions when it comes to future planning, and many are leaning on third-party providers.
90% of banks and financial institutions are building technology design and architecture into their business planning, while 80% of retail banks and 74% of commercial banks have already worked with infrastructure providers, research from the ‘Bank to the future’ whitepaper revealed.
Learning from the crises of yesterday
While the COVID-19 pandemic has accelerated many institutions’ digital transformation plans, this clearly isn’t the first crisis the sector has faced. Amid the rapid pace of change and the challenges presented by 2020, can any lessons learned from the past be applied to today?
“It’s always worth looking at previous crises,” said la Cour. However, while some past learnings can be applied, each new crisis brings its own challenges and businesses must adapt to survive.
The importance of collaboration within the financial ecosystem is felt even more keenly in light of the pandemic, with both incumbents and newer FinTechs bringing their own strengths to the table.
While banks have historically had to deal with the burden of legacy systems, the upside to that is that they have history on their side, explained la Cour.
“History matters if you’re a financial institution. If you’re a large player and you want to deposit large volumes of funds, you will typically look at how old the incumbent is, and how the balance sheet is… I think banks should really utilise [that].”
Meanwhile, the agility and innovation that is typical of FinTechs can be a key asset in navigating challenging economic conditions.
Futureproofing for tomorrow
Today, incumbents are much more keen to embrace collaboration with the newer entrants to the market – a strategy which will be key to futureproofing their business models.
“What we’ve seen from our side is that six to seven years ago, banks were much more reluctant to partner with other businesses, and wanted to do everything themselves,” la Cour said.
“That shift in mindset that we’ve seen will be instrumental for banks to move forward and to be relevant in 10-15 years.”