Digital banking post-Covid-19

The Covid-19 global pandemic has affected almost every aspect of life, including banking. Several of the larger banks have already reported a swift surge in applicants for mobile banking apps and digital accounts during the lockdown, especially from the over 50s who in the past may have been typical branch users, but found during lockdown that this option was unavailable.

A report by McKinsey, No Going Back: New Imperatives for European Banking says, “European banking leaders must focus on reimagining strategies and operations if they are to thrive in a post-COVID-19 world.”

It outlines the tactics that banks must adopt to alleviate the excepted economic pressures post-Covid-19, and this means that the decisions taken now will “set their performance trajectory for the years ahead”.

The shift to remote working and serving customers through an online or mobile banking model has demonstrated the potential of digital technology to a new swathe of customers, and to the banks themselves. The McKinsey report notes that financial services leaders should “reimagine how their institutions operate” around a set of key imperatives.

What are the imperatives for banking?

McKinsey also says its own European customer survey shows an evolution of customer behaviour. This includes a 20% increase in digital engagement levels and a 50% drop in the use of cash. It also reveals that between 20–40% of customers have expressed the need for products to help them through the current crisis.

McKinsey says the six imperatives are:

  1. Innovate new products and propositions.
  2. Shift to digital services and sales
  3. Build a leaner and more scalable cost base
  4. Focus on speed, both for the organisation and technology
  5. Recognise the importance of risk and capital management
  6. Merger & Acquisition deals will play a role

With regard to the last one, while it may feel that M&As are unlikely right now, McKinsey says that “it remains a path to rapid cost savings or acquiring new abilities.




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