Shifts needed in banking to deliver flexibility and agility in a post-COVID world

  • By Jonathan Tanner

Most financial services organisations struggle to move work between front, middle, and back office teams even at the best of times. 

However, when a once in a lifetime event of the magnitude we have seen in 2020 hits, this can become an acute issue, as it has for many banks. 

This was particularly evident during the initial phase of the pandemic where many struggled to meet their customer needs, despite thinking that they were well prepared to meet demand of this scale.

According to our research, 96 per cent of Australian organisations believed they were on track with their digital transformation initiatives before the pandemic hit and were well prepared to manage their business under any type of business or economic condition. 

However, the pandemic revealed an overconfidence in their digital transformation progress, subsequently exposing substantial gaps for 85 per cent of the organisations.

One of the key challenges faced by the banks was that branch staff had to move to work from home during the early stages of the pandemic at the same time as call centres were getting avalanched with requests for assistance. 

Banks struggled to leverage this part of their workforce to effectively assist with customer enquiries due to a lack of access to relevant systems, training and channels. 

Another challenge was that operation teams that required access to productions systems or physical documents struggled with completing work in a timely manner due to remote working restrictions. 

Yet, this should not have been the case given the significant investment in IT systems that banks have made in recent years, which according to Gartner was around $65 billion globally on software alone in 2019. 

These investments have typically focused on three core areas - risk and regulatory uplift including remediation of past issues, migration and adoption of cloud-based platforms and technologies, and the uplift of digital solutions and customer experience. 

However, the investments have been made in isolation from each other, and has created more complex issues in the long term, such as a lack of organisational agility and added operational costs.

At the time, this was perhaps acceptable given the strong revenues and margins, but in the current climate, as banks are looking for savings in a low margin environment, these investments could be holding them back. 

Delivering a flexible and agile workforce

A well-managed and optimised operational backbone has the potential to be a strong source of sustainable competitive advantage for any bank in a post-Covid world. 

However, it must be built on a set of capabilities and technologies that delivers a future state agile workforce – one that is less siloed around product and channel but focused on delivering good customer outcomes.

In order to have an agile workforce where tasks can be flexibly shared across teams and functions, there are three key changes that banks need to make in the way they think about work and design new systems to accommodate it:

• Banks need to ensure they have the ability to support more distributed teams across multiple settings including home, office, call centre and branches.

• They need to be able to seamlessly reallocate work based on changing demands and volumes. For example, if in-branch activity is low at a particular time, then having staff handle calls from direct channels, or handle loan settlement activities on demand would be beneficial and efficient.

• The work itself needs to be guided with enhanced levels of automation so that non-dedicated resources can be supported, and employees can be easily trained and upskilled to handle different work types.

However, these changes also need to sit alongside a set of integrated capabilities designed to drive operational efficiency from its processes and its people:

• Process excellence will enable the movement of work around a bank’s network through a strong focus on well-designed processes that emphasises customer outcomes. There should be transparency around the cost and impact of poor-quality work and processes, and they will be measurable from start to finish.

• People excellence is critical component in managing the agile workforce of the future. In order to be effective at managing a distributed workforce, it is necessary to know where that workforce is and the capacity and the skills they have to take on different types of work. This will require ongoing focus and management of the demand and supply within the network, performance coaching, proper work management systems, and critically, standardising work practices to ensure consistency and quality.

As we move into 2021, it is clear that the working landscape of the future will be significantly altered. 

The combination of changing demographics, a low margin environment, the need to be compliant and secure, and the entry of an increasing number of disruptors into market as a result of changes such as open banking and fast payments, will force the banks to increasingly look to both the bottom line and an uplift in their NPS if they want to continue to thrive. 

The successful ones will be those that embrace flexibility and agility so they can leverage the most potent capability they have – their workforce.

 

Jonathan Tanner, is senior director, industry principal Financial Services & Insurance, Asia Pacific at Pegasystems and has worked for two of the big four banks.