BIZweek n°311 9 oct 2020
BIZweek n°311 9 oct 2020
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  • Parution : n°311 de 9 oct 2020

  • Périodicité : hebdomadaire

  • Editeur : Capital Publications Ltd

  • Format : (260 x 370) mm

  • Nombre de pages : 8

  • Taille du fichier PDF : 4,4 Mo

  • Dans ce numéro : l'industrie bancaire s'élève au nouveau normal.

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VENDREDI 09 OCTOBRE 2020 BIZWEEK ÉDITION 311 LA TOUR WHITE PAPER INITIATED BY HUAWEI AND IDC Banking Industry risesup to the New Normal The banking industry must prepare itself for change and the new realities of the world which has dramatically changed in a short period. Economic malaise, coupled with an unprecedented shift to digital channels, means that banks now have to deal with both lower potential revenues as wellas loss of channel activity— set against a backdrop of redefining the workplace, which may become somewhat permanent. Banks looking to understand how to survive and increase their resiliency in these trying times will need to make investments in key areas in accordance to which phase of the economy downturn they are in. This white paper delves into key best practices and benchmarks which can enable banks to deliver on these ambitions and place them in optimal positions to recapture growth when recovery is underway At HUAWEI CONNECT 2020 (from 23rd to 26th September), International Data Corporation (IDC), the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets, along with Huawei, have released a major White Paper titled «Banking Industry Risesup to the New Normal». In this paper, IDC and Huawei survey the impact that Covid-19 has had on the banking industry and outlines steps that should be taken by banks to ensure their future success. The financial services industry has received a mixed bag of impacts. Core lending businesses have been hit hard as many banks have been mandated by the government to arrange loan moratorium periods for existing loans with customers and new loans are becoming increasingly hard to approve in the current macro-economic environment, despite there being an obvious need for financing from both consumers and corporations because of the reductions in income from which allare currently suffering. Payments and particularly digital payments have reported some favorable results for Q1, particularly in mobile wallets which have seen increased signups and usage- particularly for online payments. Offline and in-store payments however have taken a significant hit globally with big payments players such as Visa and Mastercard reporting revenue decreases for Q1 due to diminished spending from consumers as they have migrated away from non-essential purchases and moved towards a focus on essential priority goods. Other banking services such as advisory have also slowed down as both retail and corporate customers switch to more conservative spending modes and delay investments and larger purchases until the future is clearer. Q12020 has seen market capitalization across the major banks of the world lose billions in value, the exception being several banks in China which have seen increases in Q1 compared to prior periods. Market sentiment has reacted negatively in a defining way to the threats that are facing the banking industry. 4 Cont’d on page 5
VENDREDI 09 OCTOBRE 2020 BIZWEEK ÉDITION 311 Chari 3 : ResillencyindexScoring by Subcategory 32 41 1 6 4 u Channel Upgrades Communicebion SCOFG'Reformai Score North Arrwerice Threat Grc,amr throat of Non-PorformIng ExIsting Loans Lerlding Ex.IstIng Loans subJect to government mandated moratoriums New bans carry higher risk of non-performance due to economic situation Drop In demand for property and car loans Customers unable to performbanking transactions at physical locations ATM and other remote physical locations overloaded and unable te be serviced Business Line Impact Affect:ad illissessrnant Lending High Lending Lending High Services and Priyments Services and Payments Higher risk exposure due to unusual aarvity from customers Lending ana Mich bas net been documonted provicusly Services/Paymenrs Paynents lalling across the board — particularty for langer ticket items such as travel and premium goods Overload of certain channels and bock office such as mobile'Lending and 14 LA TOUR The New Reality : What Banks Need to Meet the Challenges IDC has identified certain requirements that are critical to responding to the challenges of doing businessin 2020 and beyond. Banks that already have or are working toward the development of these capabilities will mark themselves as having technology capabilities that allow for enhanced resilience and the ability to face the extraordinary challenges of 2020. Channel Upgrades For many, the experiences of 2020 have involved losing almost allaccess to physical banking services. Although many banks have already made significant investments into channelupgrades, there are still processes that may require branch visits for origination or final verification. Branches have seen a pressing need forupgrades to further drive efficiencies at physical locations, allowing for more efficient and effective servicing of customers. Communication Rethink This year 2020 has seen banks become vital sources of information and support during a crisis. People have relied on their banks to continue to keep them funded and financed but this period has revealed cracks in the communication strategies of some banks, as they have fed their customers with disparate and sometimes conflicting information regarding important issues such as implementation of loan moratoriums. Infrastructure Overhaul The pandemic situation of 2020 has proven to be a testing time for internal controls and cybersecurity for many financial institutions. Threat profiles have changed due to both internal and external factors and weaknesses have been exposed in the behavioral history method of detecting fraud which has spurred banks to think how they could improve insecurity and controls to better account for undocumented behavior in general while maintaining service levels and security standards. Data and Analytics Redefinition With the advent of the pandemic, historical behavior models have been rendered far less useful in predicting for future behavior. One area that could significantly help both customers and banks during the long recovery period from the economic effects of COVID-19 is a different approach to default. A better use of data analytics capability would be to identify customers with potential of default risk and engaging them in a proactive deferral or payment modification scheme to both reduce collection costs and build long-termcustomer loyalty. Table 2 : Threats to the Global Banking Industry online due te other channels belng unavallable Services/Poyments Workflow Reimagining Banks will need to instigate major cultural change that can foster collaboration and breakdown legacy barriers and thinking. The culture of innovation must be a core part of the businesses mission and instilled from the top-down. A process which can benefit highly from this collaborative thinking is loans processing. In many loan applications, manual documents still need to be scanned or verified for credit checks. However, fully digital loans processes for loans such as personal loans are now possible and involve the usage of technologies such as robotic process automation. Innovation Acceleration There are also innovation driving technologies which serve as platforms to create totally new possibilities across banking and the wider financial services industry. For example, we are only beginning to see the role that 5G plays across commerce. Along 23 Medium Medium Medium Pcyrnerits Medium Infrastructure Data and Anatylics. ackflow Innovation Overhaul Score leasiefinition Score Reirnagining Score Accekerabon EMEA AisraiPecifk (Exç. ChinM China Sumac ILIC 20211 2S Medium with 5G, blockchain and distributed ledger technology (DLT) are two of the key technologies which truly have the power to change almost everything. Conclusion As the next normal comes in its eventual shape or form, it will certainly not be business as usual. The pandemic will have fundamentally altered many customer behaviors and banks will have to be adept at handling the new realities of business. To this end, banks should look at the further horizon and at innovation accelerating technologies which can possibly have a far-reaching impact on business for the future. Banks should understand that their competitors willalso have been executing their own digital transformation plans throughout the pandemic phases and that competition in the new normal will likely be even more intense. This white paper ends with the clear reminder that customer expectations must and should remain at the core of what the bank decides to do and not to do. 5

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