City Powerhouses Will Need to Adjust to the “New Normal”
This article was originally published by City A.M.
London’s leading financial services companies have quickly had to reassess their plans to get employees back to the office.
While many industry leaders will have come to a painful realization that arriving at a “new normal” will be a more iterative process than previously imagined, they should take stock in the progress that has been made since lockdown first hit the UK in March.
Most significantly for the future of the financial services industry, the monumental shift towards agile and remote working has meant that the digital transformation of legacy banks is now moving at a faster and more exciting pace than ever before.
Earlier in the summer, it was reported that some of the world’s largest banks, including Goldman Sachs, Deutsche Bank and HSBC, have all now signed deals with large tech companies to integrate cloud computing solutions into their business models, part of what is being called a “tech awakening” for the industry.
So now, as we look towards more uncertain times over the coming months, cloud technology poses a potential silver lining for banking in the “post-COVID” era.
COVID-19 sets a new precedent
A 2018 report by Accenture discovered that 43% of banks had no cloud strategy or had only started implementing basic practices. Among those banks, 63% had no key performance indicators to measure their progress towards cloud infrastructure. Many cited privacy, data security and compliance concerns as the key barriers keeping them from making this shift.
But the COVID crisis has forced legacy banks to put aside these worries and rapidly bring forward plans to fully integrate their infrastructure with cloud technology.
In a survey by Snow Software, which polled 250 IT leaders around the world, 82% of them said they’d increased their use of cloud technology in direct response to the pandemic and shift to remote working. In the same survey, 76% of the IT leaders said that the coronavirus pandemic had led to an increase in spending on private and public cloud infrastructure services.
A major contributing factor has been the need to ensure that employees are able to work together while working from home.
Cloud-based communications tools such as Slack, Zoom and Microsoft Teams were adopted prolifically, to ensure that banks and their employees could remain agile during lockdown and support organizational resilience as society grappled with the significant change.
What’s next for financial services?
By entering this new phase, the financial services industry will once again need to take stock of where it is, and its digital transformation needs.
In a post-COVID world, we will rapidly see the impact of legacy banks finally harnessing cloud infrastructure and unlocking the value that will enable them to continue to innovate, grow and progress their digital transformation.
This will include modernized customer service solutions, more online and digital-first services, better data analytics, fraud detection and more resilient operations.
Moreover, the financial services industry now has a chance to address its long-standing difficulties with talent attraction, in part by introducing more flexible ways of working.
While staff at all levels recognize the value of teams coming together, younger talent will be looking for more hybrid models of working, splitting time between home and the office.
The key for all financial services companies will be to ensure that they can maintain the rapid level of digital transformation they have seen in the past few months in a compliant way.
While compliance was seen by banks as a barrier to digital transformation for so long, what has become clear to many is that embracing new technology and committing to digital transformation does not need to mean more compliance risk.
Take the move to collaboration tools such as Zoom and Microsoft Teams for example. Banks had long withheld from deploying these tools en masse for fear of non-compliance. Then, during COVID, collaboration tools became a lifeline for keeping businesses connected while entire workforces were working remotely for the first time.
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