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Five Things We Value More Because of COVID-19

The coronavirus outbreak is a human tragedy affecting the health of hundreds of thousands of people, and the financial health of millions. We are still in the infancy of this unprecedented global event as we try to predict different recovery scenarios and determine how deeply it will impact the world’s economy. 

I believe financial companies that more effectively utilize what they have learnt in these days will bounce back more rapidly. Those companies will use these learnings to quickly develop their competitive advantage around customer-level management. This requires executive managers to see the wider picture and appreciate the learnings from the market responses.

Let’s focus on five things we value more today in financial services:

1. Value of Platform Systems 

The primary lesson from financial companies’ response to COVID-19 market trends is that financial challenges cannot be tackled in isolation. They require collaborative working between teams and departments. This requires a “joined-up” centralized analysis and decisioning capability. Companies have realized that responding to new guidance from governments and  bringing new financial products to market to support their customers affected by COVID-19 had to be addressed in a matter of hours, rather than days, and this could best be achieved via integrated systems running on a platform/suite.

2. Value of Cloud-Based Systems

When all employees were ordered to work from home, large operational departments — such as call centres or collections outbound and inbound teams — were required to move their operations to employees’ homes via security-protected equipment. Cloud-based systems enable companies to implement this on a larger scale within much shorter durations and at a significant cost advantage.

3. Value of Customer-Level Management

Companies have been reminded how important it is to know their customers’ historical and current financial situation and payment performance, in order to act with urgency to meet demand. This required customer-level database access, customer-level analysis and decision-making processes, especially when these customers come from all segments, e.g., from individuals and small business owners, to large corporations, which were normally managed by different departments within their organization.

4. Value of Machine Learning Models

Financial companies will observe significant differences between consumer behaviours in pre, during and post COVID-periods. Since machine learning models use algorithms that can learn and improve themselves in real time with each transaction, these models will dynamically adjust to revised consumer behaviour patterns. Financial companies will need to worry less about the degradation of model performance if they use machine learning models.

5. Value of Digitalization

Digitalization has already been a major focus for financial companies, with each of them at a different point of the digital maturity curve. However, with the unprecedented demand into their customer service departments, digital channels  — with their scale, speed and efficiency advantages — were no longer an alternative channel, but the main communication channel for most financial companies. Digital autonomous services, such as chatbots, inbound IVRs, web forms, mobile applications, online payment channels and even social media, were heavily utilized for customer communication. Post COVID-19, there will be more digital customers and financial companies will need to invest more in digitalization.

One can argue that all these five elements are inter-related. What we are observing is that platform systems are usually running on cloud; these systems are heavily utilized as part of digital transformation strategies; as their design allows, they open the corridor for implementing customer-level decision processes; and machine learning models are used to support these customer level decisions.

We believe that these will be the milestones of the “new normal” for banking in future. The challenge for financial companies is to find a trusted partner like FICO which has both the expertise, products and services across the globe to help companies meet and conquer these challenges.

For more information on this topic, read our new white paper on Agile Decisioning in an Unprecedented Downturn.

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