A new normal for banking in the coronavirus age

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The rapid spread of COVID-19 has presented the world with a myriad of challenges on many fronts. The health crisis has brought chaos not just to the health industry, but the global economy. Beyond liquidity injections to aid the economy, governments worldwide have had to employ extreme measures to curb the spread of the coronavirus. International travel bans and border closures were enacted, and within countries temperature checks, mandatory quarantines and even city lockdowns were among the directives put into effect.

Companies have had to take measures to protect themselves too. When the pandemic first broke out, several multinational corporations (MNC) including Google and Facebook had to recall their employees and close their international headquarters and branches. Local businesses have resorted to working from home measures as social distancing clears the streets and offices. Similarly, companies have begun to focus on e-commerce and online channels to maintain a stream of revenue as virus fears keep customers home.

Banks have not been spared. With fewer people seeking physical services in bank branches, banks have had to ramp up their digital offerings to continue to service customers. While digital banking is not a new concept, it has been the tech-savvy millennials who have embraced it, with the older generation taking more time to warm up to the idea. A report by McKinsey revealed that digital banking penetration has increased by 1.5 to 3 times since 2014, and even more rampant when it comes to mobile banking penetration[1]. The COVID-19 pandemic has only served to accelerate this growth, as virus fears thin the crowds at bank branches.

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This surge in demand is not without its challenges. While traditional and incumbent banks do offer online banking services on the front-end, there hasn’t been a full transition to the digital world as behind-the-scenes processes remain largely the same. Needless to say, the digital transformation of the industry has been taxing on the resources of incumbents, many of which still rely heavily on physical branches and their capabilities.

The virus outbreak has underscored the value of a digital-first infrastructure. Incumbents with legacy models are faced with the urgent challenge to digitally transform as they adjust to the new normal and keep pace with unprecedented demands. At this critical juncture, the key decision that incumbents have to make is whether to devote their time, resources and manpower into developing their digibank functions or to seek help from third parties. While incumbent banks previously had absolute control over their entire value chain, the surge in demand for digibanking could force them to explore alternatives to improve capabilities such as artificial intelligence and quantum computing among others.

The repercussions of the coronavirus will last long and will become the unintended catalyst that accelerates digital transformation in the financial services sector. To ensure long term resilience and emerge stronger from this pandemic, companies need to continue investing in efficient and robust digital frameworks, while balancing short-term efforts with long-term measures. Incorporating the right mix of best processes, people and technologies remain critical in good and bad times. According to a KPMG report, 80% of revenue growth hinges on digital offerings and operations by 2022[2]. This means that increasingly, organizations are measured by the way they design and deliver technology services, respond to issues and manage crises.

The challenges that incumbent banks are facing today may be well worthwhile. Digital banking brings convenience and efficiency to the customer, who no longer has to wait hours in line at a physical branch. A report by McKinsey showed that banks leveraging data analytics, digitization, robotics and AI can free up to 20% of capital[3]. These functions can be effectively integrated into wealth management, consumer and SME lending and transaction banking, all of which are core services of banks.

Consequently, collaboration with a third party with technical expertise in digital transformation and fintech can further boost business resiliency and longer-term growth. Up until this point, there has been no real urgency for incumbent banks to make a complete shift to digital, especially with over 50% of consumers still preferring to visit physical branches even for those who use digital channels.[4] On the other hand, Big Techs like Google, Amazon and Apple are foraying into digital financial services alongside new players and neobanks for a share of the pie. With that, the incumbents have to brace and be prepared for a new wave of digital disruptions as consumers demand for a more holistic banking experience.

It may be a difficult time for all, but human beings are resourceful creatures. They say necessity is the mother of invention, and it is truly necessary to adapt, providing solutions for life to continue even as we are hit with crises. As we begin to ponder our collective future post-coronavirus, the opportunity is now to accelerate sustainable outcomes. People and businesses might perceive the new normal and temporary measures to be transient, however we are confident that digital banking is here to stay. As our hyper-connected world moves increasingly towards digital experiences, the importance of digital banking tools have never been more pertinent, especially for banking and payments which will outlast the coronavirus.


[1] Asia’s digital banking race: Giving customers what they want – McKinsey & Company

[2] Market Speed: IT operating models in the age of the connected enterprise – KPMG

[3] How Asia is reinventing banking for the digital age – McKinsey & Company

[4] Recognizing the value of bank branches in a digital world – Deloitte

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