The five main imperatives for banks in a post-pandemic era
Banks
around the world are adapting to the possibility of an irrevocably
changed post-pandemic world. What is the best way to address these
changes?
Author: Iakovos Giannaklis, General Manager Retail Banking, Eurobank
February 8, 2021
The pandemic is mounting a historic challenge for the global
economy and the business community as a whole is dealing with the
largest economic disruption we have faced on a global scale since World
War Two. Greece, similarly to most European economies, has been
experiencing a deep downturn in economic activity, estimated to reach a
10 percent economic detraction for 2020. Projections point to a modest
recovery of around 4.8 percent during 2021, as positive developments on
the vaccination front allow for cautious optimism for the year ahead and
the prospects of an economic rebound.
This new crisis occurred when Greece was accelerating its pace to
recover fully from the global financial crisis that had a huge impact on
the Greek economy. Eurobank, one of the four Greek systemic banks, had
completed its economic transformation and dealt effectively, ahead of
local peers, with the non-performing loans inheritance of the Greek debt
crisis. In 2020, Eurobank materialised, despite the objective
difficulties imposed by the pandemic, its complex balance sheet
strengthening plan, that had begun in 2018 and that will eventually
allow the bank to increase its competitiveness in the post-COVID-19
recovery phase.
Leaving the economic downturn aside, the pandemic has also brought
along fundamental changes in customer behaviour that have reshaped
retail banking, forging us to rethink our organisation, redefine our
service and operating models and our value proposition to our clients
and reframe our economics.
As a result, I see five main imperatives for banks, to position
ourselves for the strategic long-term changes already underway in the
post-pandemic era, encompassing: redesigning our service model,
transforming digitally, adopting new smart ways of working, alongside
with strengthening our risk management, and bringing environmental,
social and governance (ESG) corporate purpose to the forefront.
Transforming customer experience
COVID-19 has accelerated the migration of retail banking customers,
throughout the world, towards digital channels: more users of e-banking,
fewer customers visiting our branches. In light of that change, retail
banks need to reassess their distribution strategies and the
physical-to-digital channels’ mix. A key concern is how much physical
space is really needed and how to make the most use out of it. In my
view, as it is also supported by recent research, customers will never
cease to value banking branches, especially for those interactions that
entail advice or help, where customers appreciate human contact.
Eurobank has already been making investments to accommodate
customers’ moves from traditional to alternative channels, whether that
is advancing our call centres’ infrastructure and functionalities,
upgrading our automated payment systems, redesigning our e-banking and
m-banking or adding new features on our award winning v-banking service,
which allows for individual or business banking customers to consult
and transact with their relationship manager by video. At the same time,
we are also reinventing our customers’ experience in our new era
designed branches that will be available this year. Our goal is to
provide seamless, omni-channel customer experience, as defined in our
bank’s new motto: ‘Eurobank is your bank, wherever you are: in your
house, in your office, on the street!’
Technologically accelerated changes
The experience of the pandemic has highlighted the importance of
deploying banks’ wealth of data in the service of a more personalised
customer experience, redefining the industry’s former ‘customer centric’
approach to the new, individualised, customer segment of ‘one.’
Following the paradigm of other industries, which have framed our
customers’ expectations, banks adopt micro-segmented customer engagement
strategies that, based on customers’ behavioural data and past product
purchases, customise product recommendations and personalise service and
communications.
Going forward, banks are called upon to play a continued
role in the pandemic recovery, addressing ESG imperatives and having a
sustainable impact on society
In the post-COVID-19 era, banks will focus even more on enhancing the
customer journeys, expanding their data sources and analytics
capabilities so that customers may receive timely credit extensions and
personalised financial transaction reminders throughout the day, in a
similar way they receive movie recommendations from Netflix. In
parallel, it is imperative that we build, as we already do, our
analytical capabilities, incorporating machine learning algorithms to
rate our customers’ experience and explore their insights on a regular
basis and at every touchpoint and embed it in our decision-making to
foresee customer expectations and rapidly address customer needs in a
personalised and relevant way.
Cost efficiencies and innovation
Eurobank has already signed up on the digital transformation journey,
aiming for paperless branches, digitised internal process, and automated
infrastructures to maximise productivity of central office functions.
In the face of the tech challengers that also frame our customers’
expectations, we have set as a strategic priority the creation of
in-house innovation boosters for quick time-to-market ideas from the lab
prototype to small-scale population testing. A few examples of
first-to-Greek-market products include: Eurobank wallet, e-commerce
solutions (bundling banking and non-banking services), payment link (an
easy to use and minimum infrastructure payment service offered to
merchants during the pandemic), bio-card, and tourism electronic
platform.
In parallel, creating sector-based ecosystems, and becoming a
one-stop shop providing our customers with value-adding banking and
non-banking services, has been a value creation source for our
customers.
During the pandemic, we transitioned rapidly to having at times over
50 percent of our staff working from home. Moving forward, we plan to
adopt hybrid remote-onsite working models that will help us to benefit
from the related flexibility, cost efficiencies, and higher employee
satisfaction rates. In the meantime, investing in digital collaboration
tools and in our people’s digital upskilling and reskilling is a
necessity.
Risk management and ESG
The need to mitigate the risk of an increase in non-performing loans,
due to COVID-19, calls for investments in automated credit
decision-making that combined with the deployment of transactional
behavioural data will allow for enhanced risk management and lead to
improved credit decisions. Advanced early warning systems and
sophisticated credit portfolio reviews with advanced analytics are
expected to be widely deployed in the coming years to address various
risk considerations including sectoral concentrations.
Finally, the role banks assumed addressing the pandemic crisis,
ensuring employees’ and customers’ safety and supporting economic
recovery, brings corporate responsibility to the forefront. Going
forward, banks are called upon to play a continued role in the pandemic
recovery, addressing ESG imperatives and having a sustainable impact on
society.
At Eurobank, responsible banking is at the core of our strategic
priorities, with the design and implementation of green funding,
socially supportive programmes and corporate social responsibility
initiatives. During 2020 we launched biodegradable cards and electric
car financing, we eliminated paper statements, and endorsed paperless
branches and paperless internal procedures, while ensuring environmental
certification of our buildings.
Finally, lessons learned and strategic directions driven from the
pandemic, can definitely have a positive effect on our bottom line.
Challenges triggered by COVID-19 have been putting an undeniable stress
on the banks’ profit and loss. Nonetheless, improved productivity and
cost efficiencies can be achieved as a result of our digital
transformation; and targeted, personalised and relevant customer value
propositions in conjunction with advanced risk management systems can
drive our top line.
In the post-pandemic era, banks will play a pivotal role as the
backbone of the financial system’s stability and as the driving force to
a socially and environmentally considerate world, fuelled by advanced
data analytics to allow our customers a personalised experience with
flexibility, ease of usage and relevance to their lives.
Alessandro Imperiali
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