Corona Has Added New Dimensions to the Digitalisation of the Financial Industry

The financial sector had to adjust from one day to the next when the Corona lockdown hit. It has given a new impetus to digitalisation but also shown that the balance between digitalisation, organisation, and human competencies is crucial.

When banking matters have to be treated, it can take place online or by a video call instead of at the local branch. For a long time, the financial sector has digitally transformed, but this year it has experienced an involuntary boost.

“In all aspects, the Corona situation has put a greater focus on digitalisation and greater speed to many of the digital communications platforms – also in the financial sector,” says Kent Petersen, chairman of the Danish union Finansforbundet.

From one day to the next, the banks had to figure out how to organise the workforce, when they were not allowed to show up at the branches in the morning. At the same time, the employees had to figure out how to service the customers and solve tasks from a proper distance.

With this situation, suddenly, there is even more pressure on the digital mindset and the way we work. But the good part is that if you utilise your experiences with the situation in a sensible manner and establish a setup that works properly, it provides so far unseen flexibility,” Petersen states.

The preparedness was there

If the Coronavirus and the concomitant lockdown had happened ten years ago, it is hard to imagine that the banks could continue to run their business. But by 2020, the digital tools were ready.

“The society has reached a level where this can be done. There are the basics, such as broadband connections to handle the large data streams. Still, digital curiosity and skills development have enabled the employees to work in a digitised manner. Over the past ten years, we’ve seen a quantum leap in digital understanding,” Petersen says.

Generally, the banks have managed to keep the business going despite the lockdown of the country.

98 % of the companies that have approached the banks to, for example, extend a loan, or apply for a financial support package, to get through the crisis, have received help. This is unveiled by a statement that Finans Danmark has obtained from four of Denmark’s largest banks, which has helped 4,700 companies with approximately 62 billion Danish Kroner during the period. Also, 98 % of the private banking customers received help from the banks during the lockdown.

“This reveals that the banks have worked extremely efficiently in a completely unfamiliar situation. Being forced to accept that everything has to be digitised at once gives a different motivation for trying to get the best out of the situation. It turns out that many worries about the digital future are put to rest – but of course, some aspects are less desirable, and overall, we must utilise both types of experience in the future,” Petersen explains.

Personal contact is hard to digitise

The fact that the bank is digitally accessible means a lot – especially for the young generation. But even though the Corona crisis has shown that the financial sector can successfully move much of the business into a purely digital universe, it does not mean that it has to do so from now on.

“This isn’t a case of either/or, but the virtual aspects will become more dominant. Many everyday things, such as stock trading or small banking issues, can be treated virtually. However, when customers have to buy a house or handle an inheritance case, many still appreciate the personal contact. From loyalty analyses, we know that what connects people to a particular bank is the employee they meet – that is, their bank advisor. Not so much whether they have one or another design in their online banking. It’s about adding a digital format to the personal relationship that makes sense for everyone,” Petersen states.

Kent Petersen, Chairman of the Danish union Finansforbundet.

And although home-based workplaces are likely to become more prevalent in the wake of the lockdown, he does not believe that the personal contact between employees is going out of fashion just yet.

“The social network between employees is also part of the way we run a financial service. We work digitally, but we’re also social individuals. It’s clear that working from home becomes part of a more flexible approach. It can be a great advantage for both employees and companies, but, it also requires innovation to manage a company and its employees from a distance,” says Petersen.

Balancing into the future

The financial sector has proven that the readiness for change is very much there – in fact, the individual companies have impressed Petersen.

“The employees have been used to having a digital setup, but where they show up physically, to achieve full productivity in decentralised workplaces in just a few days. It also paints a picture of a sector that is undergoing pervasive digitalisation – both regarding systems that must cope with compliance and cybersecurity regarding where and how the systems can be used. And Corona has shown that it’s about a completely new way of working rather than a narrow understanding of digitalisation,” Petersen says.

While digital resilience has been proven, it has not worried him the least that there will be no need for people in the financial sector in the future.

I don’t think it will ever be 100% digital in that algorithms and artificial intelligence are the only things customers encounter. These are tools for supporting decisions – there will still be people who have either physical or virtual dialogue with customers, and there are also people who need to develop the digital solutions required,” Petersen states.

Instead, it is about finding the balance between the digital and the personal encounter – and taking the best of both worlds. In some aspects, digitalisation needs to move the service closer to the customer, so the service becomes independent of time and place, while personal contact is crucial in other aspects.

“This is the balance that we have to work with over the next few years. And then the sector must also continue to be inspired by the fact that there is a fintech entrepreneurial environment that is bubbling and developing – both in terms of concrete solutions, but which may also inspire in terms of ways of working. That way, we can end up with an excellent foundation for utilising digitalisation ideally,” Petersen says.