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Financial Services Professionals Say Lending Sector to Take A Year or Longer to Recover to Pre-COVID Levels: Survey

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The COVID-19 pandemic has accelerated the shift to digital with financial services, according to a recent report from TransUnion (NYSE:TRU), a financial services data platform and credit report provider.

The report notes that the Coronavirus outbreak sent “shockwaves” through the financial services sector and has “challenged the way lenders have historically operated.” TransUnion also mentioned that as more commerce begins to move to all-digital platforms, “empowered” consumers will have even more power or control in today’s global, technology-driven economy.

The company’s report pointed out that 40% of consumers are now using all-digital channels more frequently than before the pandemic began. The increase in the use of digital services is taking place at a time when 60% of consumers say that “the majority of their financial transactions are conducted via mobile applications.”

The report also revealed that one in three consumers are “engaging with their preferred financial institution multiple times a week via digital channels and roughly two in three are utilizing such platforms a minimum of once a week.”

Liz Pagel, SVP of consumer lending at TransUnion (and moderator of the Future of Lending roundtable discussion recently held by the company), stated:

“The pandemic has acted as a catalyst for lenders to adopt new technologies and stay competitive in this changing environment. A strong digital presence is now all but required to meet the evolving needs of consumers. Financial institutions that prioritize digital innovation to optimize their consumer interactions are likely to see the most upside over the long-term.”

Although the lending sector is going through a period of recovery following COVID, organizations are beginning to make plans for the future, the TransUnion team confirmed.

Around half of a group of 20 financial services professionals recently stated (during a Summit organized by TransUnion) that the lending sector could take at least a year or longer to “return to pre-COVID levels.” Despite these challenges, the financial services executives said their companies would be making additional investments in improving their digital capabilities because of changes in the business environment due to COVID.

Pagel added:

“Consumers are now accustomed to receiving highly customized retail offers through online channels. As a result, they now have higher expectations for their interactions with lenders. Lenders who integrate into the purchase moment, or who provide customized, relevant credit offers are seeing outsized growth.”

She also mentioned:

“As retail and financial services interactions continue their accelerated shift to online channels, lenders will need to continue to invest in seamless engagement, underwriting and servicing experiences – companies who can make every consumer touch point customized and smooth will win in the future.”

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Bank of Canada Is Reportedly Planning to Hire Economist that Will Conduct Research related to Fintech and Central Bank Digital Currencies

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The Bank of Canada, the nation’s central bank, recently posted a new job requirement for an economist who may have experienced working with digital currencies and financial technologies or Fintech services.

The reserve bank has noted that it aims to serve as “a leading central bank—dynamic, engaged and trusted—committed to a better Canada.”

The job description states that there’s currently a new wave of innovation in the Fintech space that’s beginning to transform the “landscape of currency, payments systems and financial intermediation.” The Bank of Canada is focused on an extensive research program that aims to analyze the different risks and potential opportunities of these new Fintech developments, the job description noted.

It added:

“A key part of [the Bank of Canada’s] program is the monitoring framework for money and payments and the contingency planning for a central bank digital currency (CBDC). This is a program of major social significance and will require us to break new ground.”

The economist (who will be selected for the job by the BoC) will be responsible for taking part in extensive research projects. The economist will also be tasked with “analyzing complex economic and policy issues, providing insight, generating innovative solutions, and developing tools for the monitoring of the developments in money and payments.”

(Note: for more details on this job role, check here.)

The bank stated:

“We are willing to consider staffing this position on a temporary basis through the Financial Institutions Supervisory Committee (FISC) Interchange Program.”

The FISC Interchange Program aims to support talent management and employee development from several different local agencies, including the Department of Finance, Financial Consumer Agency of Canada, Canada Deposit Insurance Corporation, Office of the Superintendent of Financial Institutions and the Bank of Canada.

Canada has taken several measures to promote the adoption of innoative Fintech solutions or modern financial services. In August 2020, the Smith School of Business at Queen’s University introduced Canada‘s very first Fintech Masters course.

According to the Smith School of Business, the course has been designed mainly for financial or tech professionals who are already working in the industry. The first Master of Financial Innovation and Technology (MFIT) program will reportedly begin in November of this year.

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Accenture to Invest $3 Billion in Fintech Initiatives that Will Help Companies become Cloud First Businesses

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David Jimenez Maireles, Customer Experience Officer at TNEX, a Vietnam based digital bank, claims that despite the skeptics, banks have been “no laggard when it comes to cloud adoption.”

Banks have been migrating incrementally, and today “the average bank has 58% of its workloads in the cloud—mostly in private cloud centers,” according to a recent report from Accenture.

The report notes:

“Many banking CEOs today believe if they had been more in the public cloud, the last few months (during the Coronavirus pandemic) would have been a lot easier. The Cloud will be both transformational and disruptive post-COVID-19, offering banks improved scalability, efficiency, agility and security. Cloud maturity is becoming a hallmark of the world’s best-performing banks.”

Cloud-powered technologies are increasingly being adopted by financial service providers across the globe. As covered, Australian SME banking challenger Judo Bank will be using the Cloud based bank operating system developed by nCino.

The Qatar Financial Center Regulatory Authority (QFCRA) recently revealed that it will be migrating its online services to the Microsoft Cloud in order to move forward with its digital transformation strategy.

There are many other related technologies such as low-code platforms that are being developed around Cloud solutions so that businesses are able to streamline their operations.

In a recent interview with Crowdfund Insider, Michael Rennie, Product Manager at Mendix, a Siemens business and global leader in enterprise low-code, explained that low-code enables organizations to move quickly to deliver unique and useful cloud-native applications that can scale and take on high volumes of traffic.

As noted in Accenture’s report, the skeptics or industry participants who doubted that Cloud based models could work had pointed out that there were security issues, lack of regulatory clarity, and “potential competitive issues with the largest cloud service providers and the seductive economics of fully depreciated data centers.”

The report also mentioned:

“The [Cloud] debate continues, but the evangelists have gradually gained the upper hand: Cloud investment has grown strongly in recent years and is forecast to continue at 15 percent a year between now and 2022.”

It added:

“More than half of [Accenture’s] top banking clients have adopted a multi-cloud strategy. We believe that, to an increasing degree, this suits the requirements of most banks. Key benefits include: best-of-breed services, autonomy and agility, regulatory compliance, and cost reduction.”

The report from Accenture further noted that Cloud solutions help reduce operational costs up to 20%. They can also reduce time to market by as much as 50% while offering around 50% quicker provisional speed.

Accenture revealed that it’s planning to invest $3 billion, over the next 3 years, in projects that will help its clients with becoming “Cloud first” businesses.

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