The current health crisis has quickly paved the way for an unprecedented economic crisis, and has thrown banks on the front line in the face of the crisis, thus taking on a great responsibility: to keep the economy and purchasing power afloat as much as possible. In France for example, banks have become the link between the State and companies with the loan guaranteed by the State (PGE). Unlike the 2008 crisis when banks were criticized for the fragility of their system, they are now seen as a strong ally.
However, the crisis has paradoxically urged the banking world to confront its structural problems in the space of a few weeks: a system that resists open banking, vulnerability to cyber-attacks, models incompatible with teleworking … are all factors that reveal resistance to digital transformation and the openness that goes with it. The crisis accelerates awareness and shows that the openness of IT systems affects the ability of banks to be resilient.
Organizational And Philosophical Resilience
The word “crisis” takes its origin from the Greek Krisis which means “judgment”, “decision” thus suggesting that the health crisis which we know constitutes a turning point in the History and a fortiori in the banking sector. Faced with the fragility of this balance, banks have the opportunity to effect a profound change by switching to a more agile organizational model. Although this transition had been gradual until then, the crisis demonstrates the need to accelerate it on several levels.
Several banking groups have set up business continuity plans (BCPs) to ensure the safety of their employees and allow the use of teleworking. However, banks that did not have an open cloud system natively had difficulty accessing information remotely, while virtual private network (VPN) capacities were not always sufficient. The traditional system thus demonstrates its limits: it is not able to meet the needs of banks for agility and flexibility.
Likewise, if open banking is a concern for all players in the sector, already driven by DSP2, its implementation remains complex. Several French banks are slow to adopt it because their original paradigm is more stoic than one could imagine. The definition and implementation of an open banking strategy are becoming urgent because the crisis is accelerating the desire to generate other sources of income and retain customers in a very competitive sector. A study reveals that 61% of financial institutions in Europe consider open banking as an opportunity and for 69%, establishing partnerships with fintechs is a priority for the next 12 months. Banks have every interest in adopting an approach that benefits both their customers and their employees.
Finally, the banks realized that the crisis was going to give rise to new behaviors that they will have to face by offering new services. This is the case for the diversification of uses of the bank card as we have seen with the rise of contactless payment which promotes compliance with hygiene measures, and which has also been the subject of a ceiling increase to 50 euros in May 2020.
A Modernization That Is Underway And Must Be Sustainable
Financial institutions have understood the role of digital technology, which has proved essential during the lockdown period. Both a driver of resilience and performance, digital technology is no longer a simple lever with high added value, but the basis for profound change. The digital relationship has become a standard mode in its own right, adapting to actions that have traditionally resorted to human intervention.
One of the lessons common to several major players in the banking world is the simplification of banking processes, thus making it possible to generate considerable internal time savings. These simplifications take place at different levels: granting of credit, management of competitions for professionals and companies, management of overruns and life of the bank account, etc. The crisis precipitated what had been theoretically demonstrated a few months earlier, thanks to more direct and less formal processes that do not obstruct the validation chain.
One of the consequences of the crisis is the increased risk of cyber-attacks and digital scams. The banking sector takes this threat very seriously, which is the third most important risk according to the report of the European Banking Authority (EBA). Banks must invest in educating and training their employees in cybersecurity as the business opens up and modernizes.
The crisis has therefore revealed the value of digital technology and the limits of closed historical systems. A balance sheet must be drawn from this unprecedented period in order to allow banks to increasingly accelerate their involvement in the era of modernization and openness, in complete safety and by integrating the new uses of its customers, but also of his collaborators. The attractiveness of the banking sector is at stake.
