With the coronavirus epidemic only just beginning in New York and London, it might be premature to speculate on the pandemic's end. It will pass though, and when it does banks are likely to operate very differently. COVID-19 will expedite the digitalization of banking in way that was barely conceivable at the start of the year.
"After the pandemic is contained, the financial services industry will go into overdrive with smart automation," says Pascal Bouvier, managing partner at MiddleGame Ventures, a venture capital firm that invests in European and U.S. fintech start-ups. "Every manual process will be reviewed," Bouvier adds, pointing out that processes like onboarding, AML/KYC, signing of contracts, of operational documents, opening of accounts, reporting, tax reporting and payment processing still include a lot of manual processes and are ripe for change.
While banks have talked the talk about automation, they have been slow to genuinely "renovate and modernize," says Bouvier. Senior technologists working on 'digitalization' projects in banks have tended to quit, often out of frustration at the slow pace of change and the lack of support from executives with nothing to gain from seeing their own powerbases eroded. COVID-19 will change all this. - "Manual breakpoints" are no longer going to be acceptable, Bouvier adds; humans must be taken out of the process. The digital revolution will be rushed through, for real.
While this will be bad news for anyone laboring in processes vulnerable to being taken over by machines, it will be a shot in the arm for technologists and 'digital evangelists' who can lead the change when the pandemic subsides. After COVID-19, even processes that previously seemed immune to digitalisation will be up for grabs.
"New issuance must be totally digitalized," says one managing director at a major U.S. bank, speaking off the record. "There will also be a big push towards being less reliant on the physical proximity of traders and salespeople," he predicts. "Voice trading and voice sales trading in the OTC [over the counter] market is a huge problem that will need to be solved."
Sometime later this year, then, banks are likely to go shopping in earnest for digital transformation experts. And this time around, the people they hire will be given some real power.
Photo by Xuan Nguyen on Unsplash
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