COVID delays digital reckoning for banks

The COVID-19 pandemic has not proven as destructive to banking as it has to retail or travel – at least not yet.

This is according to the latest predictions from Forrester, which stated that the crisis has put the deficiencies of many banks in stark relief, and the fallout will continue into 2021.

Bank executives will spend the next 18 months racing to shore up their digital and analytical capabilities, getting to know their much-changed customers again, all while trying to identify and act on new opportunities and innovation efforts.

In 2021, the market research firm predicts that customer trust in banks will fall from post-COVID highs, moving “from benevolence to risk management”.

Lending will dominate digital corporate banking priorities, with seamless processes remaining relevant. However, fraud and data breaches in banking will reach an all-time high next year, revealing the high number of fraudulent COVID-19 loans, “which, while often underwritten by governments, will tarnish banks’ reputations”.

The report added that: “banks’ ability to assess the impact of stress factors such as unemployment will determine their loan performance and ability to engage customers”.

As for the wealth management sector, Forrester stated that the sector will seek practical innovations that solve business problems.

Incumbents will face new challenges from WealthTech firms that possess sufficient scale and assets under management, while investors will vote with their wallets, opting for investments and managers that share their values.

In 2021, customers and prospects will choose firms that let them invest on their terms and in their preferred channels. “To preserve their margins, incumbents will invest heavily in omnichannel capabilities that service customers digitally and automation technologies that onboard customers and perform routine back office tasks,” the report read.

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