The word ‘crisis’ has a habit of chilling people to the bone. Defined as “a time of intense difficulty or danger”, it’s fair to say most of us would prefer to avoid such periods in our lives and so it has been with the COVID-19 pandemic. While Australia has not experienced the huge death tolls experienced in other countries, one only has to switch on the nightly news to see the devastating impact the 21st century’s first truly global ‘crisis’ is continuing to have on our nation.
Amid the carnage though, there is cause for optimism. For starters, the post-COVID world appears to be getting closer by the day. While the virus may always be with us, rising vaccination rates are inspiring hope that it will not be long before we are living with COVID rather than railing against it.
Another reason for the financial services industry to smile is that some of the most remarkable innovations and insights have emerged from crises and so it will be with COVID-19. In the dark days of early 2020, the Deloitte Center for Financial Services was estimating the U.S. banking industry alone may have to provision for $318 billion in net loan losses from 2020 to 2022. Eighteen months on and there is a sense that while the pandemic has caused immense heartache, it has not led to the global financial crisis many feared. Indeed, many companies and sectors are riding higher than ever on the back of new consumer needs and wants.
Amid such optimism, it is crucial for financial services leaders to identify the key financial services industry trends likely to emerge post-pandemic and, in turn, embrace the innovations that will hand them a competitive advantage.
Given it has been unfolding for decades, it almost seems too obvious to say that digitalisation will be a post-COVID trend but such is the power of the technological revolution unfolding across the world. In the words of McKinsey global leader Kevin Sneady: “The number of new patents being granted in the U.S. is running at twice the levels we saw in 2019 and many other countries have also seen significant increases … I think what will happen in the years to come will occur because of the innovations taking place here and now.” Pursuing digital excellence is especially crucial for financial services, as reinforced by research and consultancy firm Forrester’s finding that 14% of U.S. online adults used digital banking for the first time after COVID-19 entered their world.
Many mortgage brokers, financial planners and paraplanners, especially SMEs, had successfully embraced the working-from-home model prior to COVID. It just so happens that the pandemic has had large corporations reassess their need for office-based staff and consumer-facing shopfronts. Many are now favouring the benefits of a mobile workforce and the added capability to meet with clients when and where they require, thanks to adopting technologies such as video conferencing and digital document sharing and signing.
An unexpected consequence of COVID-19 has been ‘forced saving’ for many people, particularly younger generations, who previously cringed at talk of ‘saving for a rainy day’. The combination of lockdowns and social restrictions means their spending has dropped at the same time that their bank balances have grown, which signals a trend in finance services where planners, brokers and accountants could tap into demand from consumers that are more open than normal to seeking avenues to invest their surplus funds.
AI-enabled chatbots are not new but the post-COVID need for financial services firms to improve efficiencies and save costs has strengthened their claims. With customers increasingly desperate to spend as little time as possible on customer service calls, let alone waiting for those calls to be answered, Gartner research has found 70% of customer interactions are expected to involve the likes of machine learning applications, chatbots and mobile messaging by 2022, with forecasts such technology will save companies $8 billion per year by 2022.
Lower cost structures
IBM Banking and Financial Markets expert Anthony Lipp has declared the post-COVID environment will require financial institutions to become more nimble, flexible and resilient to market threats. Labelling it “the next normal for the financial services industry”, he says there will be pressure to substantially reduce operating expenses to maintain profitability. On that front, we are witnessing many businesses turn to offshore teams to help fulfil this need. From client meeting scheduling and follow-up paperwork to ongoing communication cycles and bookkeeping, businesses are finding overseas resourcing assistance to be invaluable and in a climate where some commissions and revenue-generating channels are reducing, savings on labour costs can be vital to business success.
The benefits of adopting new resourcing strategies in this period of change
In tough economic times, it takes innovation and a willingness to change how things are done to survive. Outsourcing is a resourcing strategy available to financial services, that if done well, can assist in improving efficiencies and increasing margins.
In 2017, the Banking, Financial Services and Insurance (BFSI) sector contributed just under 30% in the global BPO market. With numbers still increasing, the sector is anticipated to grow at the highest rate between now and 2025.
Our own research has uncovered the following facts regarding the impact an outsourced team can have on a financial services business:
- Save up to 70% on employment costs
Outsourcing can reduce labour costs by up to 70%.
- Productivity is 20% higher
By putting the right people in the right jobs, they perform better, are more satisfied at work and are 20% more effective.
Why the Philippines?
The Philippines is one of the most popular locations for Western businesses to outsource to. In terms of size, the outsourcing sector is the second biggest contributor to the Philippines GDP. As such, the government has invested billions of dollars into supporting the industry with world-class infrastructure. In addition to this, The Philippines also benefits from:
- Being the third largest English-speaking country in the world
- A strong tertiary education sector
- Being in the same time zone as Perth, Western Australia.
Now more than ever, it is worthwhile investigating how you can scale and grow your business with minimal risk. Download our free case study to find out how a professional services business grew their client base sustainably by 375% in just three years by embracing a blended offshore/onshore team structure.