Structurally, banks are better equipped to deal with the Covid-19 crisis than they were in 2008. However, the duration of the pandemic and the sanitary measures put in place to deal with it have yet to be determined, forcing these players to switch to a more agile and resilient model.
Reinventing the banking model
The Covid-19 crisis has not undermined the banks' digital transformation projects; on the contrary, it has accelerated them. The health crisis poses a number of challenges.
Firstly, establishments need to review the management of their branch networks. Improvements are expected incustomer experience, as highlighted by Deloitte's latest annual study, in which the firm points out that a significant proportion of customers are still looking for support.
The dematerialization of payment methods to limit the spread of the virus has become a priority. On this point, the banking sector reacted swiftly by raising the contactless payment limit to 50 euros.
Secondly, to ensure business continuity through teleworking, banks need to strengthen their technical infrastructures. Finally, they need to focus on mastering the use of real-time data to gain real competitive advantages.
So, even if the banking sector didn't wait for the outbreak of the virus to transform itself, with pressure from regulators and competition from fintechs, the pandemic is an opportunity for these players to capitalize on the emergence of new technologies and identify other sources of revenue.
Transferring key "Risk-Compliance" functions
The digital transformation initiatives implemented by banks also imply that key "Risk-Compliance" functions must continue to guarantee risks in a digital environment. Indeed, most of the systems used up to now are no longer adapted, as they are based on manual operating logic and old tools (computer queries, reporting and indicators, random surveys, etc.). What's more, the approach taken by key functions is no longer possible in a digitized environment. Their unfamiliarity with the business' operational and IT processes means they cannot effectively challenge the automation options under consideration.
The transformation of key "Risk-Compliance" functions will require efforts on upstream vigilance, but also digitization of risk monitoring and verification of the proper functioning of automated processing. For this, banks can draw on a number of technologies, such as Artificial Intelligence combined with Big Data. So it's not just a question of tweaking the settings of key functions, but of completely rethinking risk management.