New-age Banking
The financial services industry was already undergoing a transformation in business model. The pandemic will now accelerate the process
Towards the end of March, when coronavirus had triggered a near total lockdown across the world, and things were looking really bleak, not everything was gloom and doom in the financial services industry. Besides taking big managerial decisions while operating from different locations, financial institutions started finding expansion opportunities in the crisis. Several public sector banks launched emergency Covid loans as well as various kinds of personal loan products to help customers. Similarly, insurance companies, including Star Health, ICICI Lombard, Bharti Axa General Insurance and a few others, launched Covid-specific health policies. Some even launched a Covid health product offering income support by way of a fixed sum (not actual hospitalisation) for people without health insurance.
Considering that the risk and fear of a future lockdown are set to change the savings behaviour of people, the industry is looking at ways to cash in on this change too. Also, with the migrant population heading back home, banks are looking at more opportunities in rural and semi- urban areas.
Getting Tech-Ready
In the last week of February, when China was under a lockdown and the World Health Organization was assessing whether to declare the coronavirus outbreak a pandemic, Mumbai-headquartered Axis Bank started mock drills with two possible scenarios of partial or full lockdown. The biggest focus of the bank – considering that a big chunk of back- office work had to be done at homes of staffers – was cyber security and data privacy.
The country’s largest private sector lender, HDFC Bank, has also been quick to adopt a new business model that is more flexible post- Covid. It is now looking to put in place a more concrete plan once the lockdown is lifted and studying technology options for data privacy and cyber security in case core work has to be done from remote locations.
Axis Bank and HDFC Bank are not the only financial services players taking the lockdown challenge head on. Every bank is now realising the potential of exploring new ways of using technology to their advantage. Digitalisation was transforming the ways of banking even pre- Covid. But the virus outbreak has brought new ideas to the table, including work from home ( WFH), use of cloud services, more focus on cyber security risks, creating a bond with customers virtually and preparing a business contingency plan for epidemics/pandemics.
“Covid-19 will accelerate the digitalisation drive. Today, most retail banking services can be offered digitally,” says Ashutosh Khajuria, Executive Director, Federal Bank. The branch model will see big changes as video interface reduces reliance on branches. “With Zoom or WhatsApp meetings, people are now more comfortable talking through video- conferencing,” says a banker.
“Banks are using cloud for various applications through single or multiple sources. But cloud services have to be customised optimally for best use,” adds Khajuria of Federal Bank. “However, if you compare the cost benefits of WFH and higher productivity with cloud costs, the business proposition will certainly change in favour of the former.” Clearly, the old order is changing.
SBM Bank, for instance, conducted its board meeting last fortnight over video calling where the CEO, the company secretary and the directors were at different places. “We have to use technology and also find a way of socialis
RBL is using cloud services for remote working needs; this will increase in future
Star Health, ICICI Lombard, Bharti Axa General Insurance and a few others have launched Covidspecific health policies
Life insurers to launch short-term life policies for frontline staff dealing with Covid
Axis Bank to explore option of making work from home a part of its culture; same is the case with HDFC Bank