There is no doubt that Covid-19 has put traditional banking systems under an immense amount of stress. For most businesses, transforming the relationship between consumers and the financial institutions has become a necessity, especially considering the impracticality of using cash when trying to contain the virus. This has created room in the marketplace for digital solutions. It is no secret, that even before the pandemic, traditional banks were already looking at fintech solutions, largely due to the lower cost implementations, a guaranteed personalized experience, as well as an overall convenience when using fintech products.
The pandemic has evidently encouraged many more consumers and businesses to use digital solutions. While social distancing is being practiced worldwide, there has been immense growth in the use of digital financial services and e-commerce. Widely due to quarantine restrictions, we have had to change the way we run our day to day lives —from shopping to delivery, to entertainment, streaming services and mobile payments, causing payments volumes to accelerate in these areas.
According to the report published by Digital Banking Report takes a rather optimistic view of the future, at least for those organizations who are prepared. This means, banks and financial institutions, who provide digital financial services are naturally better equipped to take advantage of this situation, helping people and firms maintain and increase the access to financial services during lockdowns.
However, financial institutions must also keep in mind the increased demand of these services, which may be equally overwhelming. According to a survey held by Marqeta, 94% of banks believe that the Covid-19 pandemic has turned the payments market into a technology arms race for which they are unprepared. This means financial institutions would largely have to update their infrastructure, simplify their outdated legacy systems, renew their information-technology (IT) operating systems, as well as overall consider moving toward cloud-based platforms to withstand the stress of higher transaction volumes.
Given the rapid pace of development that the fintech industry is undergoing at this time, legacy banking systems are considered to be lacking, inefficient and inflexible in both meeting the demands of today’s tech savvy customers as well as anticipating the trends of tomorrow.
It is without doubt, that financial institutions that embrace the inevitable changes of the finance sector are in a better position to withstand the future. This widely means, these institutions should adapt to the changes by finding new ways to collaborate, adopting new digital skills sets as well as methods to compliment the human capabilities.
According to Accenture’s 2018 North America Banking Operations Survey, 74 percent of bank operations leaders say that customer experience is their top strategic priority, hence striving for the best possible UX is virtually impossible today without considering digital banking solutions. Moreover, the increased use of mobile devices should encourage financial institutions to partner with fintech providers in order to compete in the constantly evolving financial industry.
All in all, the conclusion is beyond simple. Financial institutions focusing on bettering their digital banking and payment solutions are more likely to see a positive boost in the upcoming future.