Before the Covid-19 pandemic, banks were under increased strain due to slowing industry growth, a low-interest-rate environment as well as the rise of financial technologies (fintechs) and other non-traditional players.
Today, banks are still thinking about how to keep costs under control while providing a frictionless customer experience.
While the banking industry has gradually embraced digital tools and automation, those who effectively use tools to improve employee experience and collaboration will stand out.
A look at the operating environment shows that even though banks and capital market firms have widely pursued digital transformation initiatives and business process automation, significant friction remains in the system.
Internal and external digital communication and collaboration, as well as collaboration with customers and partners, continue to be significant challenges.
Employees and executives alike are attempting to reimagine the “bank” or “firm” to compete with new market entrants as next-generation banks and fintechs demonstrate their competitive advantage through improved customer experience, increased operational efficiency, and faster time to market.
And the stakes are obvious. Traditional banks are under threat from new entrants, as well as slowing economic and industry growth. According to McKinsey, 60 per cent of banks face going out of business during the next economic downturn because their returns are less than their cost of equity.
It should come as no surprise that digital technologies can help banks significantly improve their position.
McKinsey further says banks that successfully implement digital could see a 40 per cent increase in profit due to improved top-line growth, such as increased revenues and lower operational costs. Digital laggards, on the other hand, may see profits fall by up to 35 per cent.
While most banks have made large, symbolic investments in consumer-facing technology, business process collaboration remains largely manual and inefficient.
Collaboration has the potential to improve operational productivity and key performance indicators in three ways - customer experience, employee engagement and organisational productivity.
For starters, today’s customers have higher expectations. Millennials and Generation Z are accustomed to a certain level of customer experience and digital aptitude throughout their customer journey.