Banking in the Era of Uncertainty

The weeks and months leading up to a Presidential election in the United States always create a certain level of uncertainty. This year the levels of uncertainly are exponentially higher.

The winner of the presidential race, the next Senate's makeup, the long-term direction of unemployment rates, additional stimulus, and paycheck protection programs will all impact how customers interact with banks. These concerns are magnified with the numbers of COVID cases still increasing in many parts of the world, and the reality of when a vaccine can be globally distributed is still unknown.

How banks and other financial services organizations operated before this year is entirely different from today's reality. Unlike previous market disruptions, critical aspects of the global economy will never go back to "normal."

How, when, and where people work, learn, and play has shifted permanently. The impact on financial products and services was immediate and evolving. It has also created an enormous opportunity for banks and financial services organizations to develop new products and services for both enterprises and consumers.

Unfortunately, too many financial services organizations cannot deal with the unexpected and are falling behind.

For example, as the realities of COVID set in earlier this year, people were forced into lockdowns. One unexpected trend that started as a result of the lockdowns was the sharp rise in home purchases. Urban dwellers craving more space headed for the suburbs, and others dealing with working from home and homeschooling quickly looked for new homes that met the current needs. Additionally, fueled by low-interest rates, applications to purchase homes have hit 20 straight weeks of year-over-year gains. Unfortunately, the processes that support mortgage application processing have not kept pace, and it's impacting the length of time required to close on new homes.

The technology exists to help financial services organizations better manage the rate and pace of change. Artificial intelligence, open banking, API banking, and the continued emergence of Fintechs entering the market daily create both opportunities and challenges for established financial services organizations. Several key areas include:

• The continuity of operations as employees are stranded in various locations with uncertain return dates
• Accelerating the volume and speed of processing loans to small and medium business under if additional Paycheck Protection Programs or other CARES Act-type legislation is passed
• Improving the options and quality of customer connect programs to respond to specific queries and provide all available options to meet needs that are changing by the day
• Managing liquidity over a deluge of loan modification requests, coupled with a wave of delinquencies
• Bolstering capacity for forbearances and loan modifications, and managing delinquencies and/or defaults

The keys to thriving in this new reality? A flexibly cloud-based technology infrastructure that allows banks and other financial services organizations to move quickly and not just manage change but thrive in it. For example:

• Source digital collaboration tools with business context, security controls, and network support to accelerate transaction completion across omnichannel workflows
• Build digital forms, chatbots, email bots to enable bank's customers to self-service while adhering to COVID-19 relief measures
• Enable multiple existing customers or back-office users for secure remote working infrastructure to avoid business impact
• Digital Lending plug and play solution for faster processing and disbursement of loans to small businesses, including Paycheck Protection Programs
• Optical Character Recognition (OCR), Intelligent Character Recognition (ICR), and AI/ML to extract information from loan applications and supporting documents, AI/ML models for credit decisioning/risk scoring and Smart Collaboration to assess loan requests and RPA for upload loan applications into government portals
• AI and Machine Learning- driven churn models to help identify impacted customers segments (airlines, retail, etc.) and respective business due to COVID downturn and offer product and pricing recommendations
• AI Model accelerators to reduce false positives and better detect cases of fraud
• Helping contact centers deal with a spike in demand caused by COVID-19 through AI Insights driven response framework
• Digital enablement platform for initiation and servicing for high touch products like lending and wealth management that combine messaging, mobile, video with bank-grade security and auditing
• Providing rapid enhancements to self-service portals to be able to handle the surge in client requests to minimize the need for additional staff
• Faster decisions systems and automated processes to resolve the rapid rise in service requests.

While the pending election in the US, coupled with COVID-19, are the primary sources of the current uncertainty for Banks and other financial services organizations, moving forward, the leaders will be separated by responding and capitalizing on expected disruptions in the future. We don't know what those disruptions are, only that they are coming.

By Ramkumar Seshadri, VP, Head of Corporate Banking, Virtusa