The Unstoppable Acceleration of Technology

Before the Covid-19 crisis, the banking industry was evolving and adopting new technologies at an increasingly rapid pace.  From adapting to customer expectations, to meeting new regulatory requirements, new tech was being deployed throughout the sector, enhancing the customer experience, attracting new clients and enriching brands.

As the Covid-19 pandemic emerged and quickly proved it would not be a short-lived crisis, its impact on tech acceleration was evident.  Within weeks, workforces were displaced and customer behaviour was forced to radically change. It became increasingly apparent that a fundamental change to technological adoption was required.

Employees found themselves connecting to their corporate networks from a multitude of devices, many of which were not deemed ‘trusted’.  This has created huge challenges for companies to effectively enable their employees to work remotely and communicate through different channels.  The size of the tech footprint that now needed to be covered expanded within a matter of weeks.

The pandemic also proved to be a defining moment in moving customers online, further accelerating the drive for technology investment. Mobile accessibility, corporate networks and consumer services witnessed all time highs. Even demographic groups that were previously resistant to online services, like baby boomers and seniors, have shown usage growth in digital banking.  Additionally, the financial stress caused to consumers by the crisis has led to a significant spike in call centre activity.

The knock-on effects of the pandemic and an exodus from high street retailers have shifted customer behaviour towards digital interaction, sparking a race for businesses to adopt e-commerce capabilities and digital banking. According to Deloitte, 35% of customers increased engagement with digital banking during the pandemic.

Prior to the Covid-19 crisis, the industry was significantly increasing its adoption of technology but there were still inconsistencies and barriers to conquer.  The onset of the pandemic accelerated the digitisation of industry but relaxed traditional barriers like cost of implementation, bureaucratic red tape and lack of internal resources, allowing companies to quickly react to extreme market conditions.

It is evident that the Covid crisis has compressed years of technical development and adoption into months, if not weeks. Now online more than ever, consumers are demanding greater accessibility, speed and convenience – and the competition is fierce.

Enter open banking, which quite simply is when banks, with customer consent, share financial data and/or services with third parties, leveraging technologies such as APIs (Application Programming Interfaces).  Demand for open banking increased last year as users doubled between January and September 2020. This collaborative approach streamlines the digital evolution.

This never-before-seen tech acceleration comes at a price; the proliferation of online fraud and fincrime. The UK saw a 31% increase in cybercrime amid lockdown. Pre-pandemic there was a significant uptick in online fraud, in particular, identity fraud and person-to-person payment fraud.  There was also a dramatic increase in account takeovers.  The swift and vast move online has given rise to phishing attacks, malware attacks and ransomware, increasingly exploited by cyber criminals.  There is extreme pressure on financial institutions to not only safeguard their own systems, networks and employees but also to ensure that the customer and potential customer is fully protected and that their brand reflects this.

Regulatory bodies are encouraging organisations to adopt technology to fight cyber crime, particularly flagging the ability of technology for Know-Your-Customer (KYC) and customer verification to provide more robust and streamlined client onboarding and screening. Banks have a tougher fight once data leaves their ‘walls’, as the take up of API technology leaves them more vulnerable to fincrime, which is a risk to all parties concerned.  Often, cybersecurity protocols are not enough to combat the threat of a cyber attack and again, technology has quickly adapted to face this problem.

A bank, for example, needs the capability to spot API vulnerabilities. This is increasingly being successfully achieved through the use of multi-factor authentication technologies (MFAs).  Artificial Intelligence (AI) can also be used to play a valuable role as it can be deployed to start monitoring any suspicious banking activity based on the account’s history.  It is highly likely that as open banking continues to thrive, we will be witness to another surge in tech adoption to match this growing trend and meet the consumer’s security and privacy expectations.

Will this shift to online banking and online retail be permanent? Or, could it be considered a pandemic-induced fad?

Time will indeed tell, but banks will need to assess the effects that the pandemic has wielded on consumer behaviour. Financial institutions must determine which behavioural traits will be permanent and will therefore require consistent investment and development.

Without doubt, Covid-19 has acted as an accelerant for the digitization of the banking industry.  Customer expectations and the way in which they have quickly adapted to the new way of banking and interacting online is likely to stay. Therefore, those companies that continue to invest in customer experience, accessibility, and forever evolving security measures, will be able to differentiate themselves to retain and attract customers.  The displacement of the workforce and the resulting multi-channel communication technologies that have been employed have also paved the way for flexible working and a reduction in overhead costs: An attractive outcome for both employees and employers .

The good news is the AML, KYC, MFA, anti-fraud/impersonation check technologies are available and will adapt to meet these new expectations and the security threats that will inevitably arise.  This in turn will enable customers to enjoy liberated accessibility whilst organisations can protect themselves, their workforces, and their clients whilst continuing to develop and grow.

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