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The financial services industry was in the middle of unprecedented disruption—and that was before the pandemic that changed everything.
New competitors, new consumer expectations, and new technologies (especially automation and augmentation) were already remaking the industry’s fundamentals. Accenture research from just before the global COVID-19 outbreak found that automation and augmentation could save the industry upwards of $140 billion in North America alone. Fresh opportunities for partnership and cloud transformation are emerging, while corporate purpose and trust are emerging as critical forces.
Perhaps most important of all, a new generation is also entering the workforce.
The global pandemic will amplify and accelerate the impact of these developments, making this a critical moment for financial services firms of all sizes. Research on past recessions tells us that only a small number of companies are likely to flourish after the recession sparked by the pandemic ends.
The agile imperative
Forward-thinking leaders have been closely tracking these tech and demographic trends for some time. But even the most proactive among them did not see the pandemic coming—no one did. This has accelerated transformation strategies as the pandemic compresses timelines and speeds up workplace change.
For example, financial services firms have long given employees an amount of flexibility, including working from home. But the pandemic made remote work and telecommuting almost universal in the industry. Now firms like JP Morgan and Nationwide are making their emergency remote work systems permanent for large parts of their workforces.
Likewise, the COVID-19 pandemic is also forcing banks to expand their online offerings and infrastructure much faster than planned. Customers who previously hesitated to do business online have now been forced to engage with the system. Many have been surprised by the convenience and efficacy of online banking. The long-term impact will be declining appetite for physical branches as the sudden spike in demand for online and mobile options becomes permanent.
The pandemic has also created the conditions for a fundamental reimagining of the industry’s relationships with its customers.
As my colleague Alan McIntyre recently wrote for Forbes, a bank’s typical connection with its customers, before the COVID-19 crisis, was mixed. Customers trust banks on data security and transaction management—but not as advisors when times get tough. This has allowed fintechs to gain market share by showing customers that they understand their day-to-day financial challenges.
But many banks have launched agile outreach programs aimed at addressing these challenges during the pandemic. Banks may decide to prioritize good will over the fee income that can erode customer trust—which could address the “trust gap” that puts five percent of retail banking revenue at risk.
To capitalize on this moment, financial services organizations need agile workforces and HR practices to keep up with these sudden changes.
But that is just what many of them do not have. Accenture research has found that most banks, capital markets firms and insurers score below average on adaptiveness and stability, the two key elements that comprise enterprise agility.
Firms identified in the research as “truly agile”, meanwhile, are more than twice as likely than the average firm to achieve top-quartile financial performance.
$140 billion at risk
As mentioned, a pre-COVID-19 Accenture report quantifies the impact of automation and augmentation technologies on the financial services workforce. The findings are startling.
The modelling projects that up to 10 percent of all tasks in financial services could be automated in the next five years and that 48 percent could be augmented by tech in that time. This could save the industry up to $140 billion.
A majority of leaders in the industry are aware of the opportunity, with 67 percent agreeing that artificial intelligence (AI) will be crucial to differentiate in the market. But they also say that just one in four employees is prepared to work with intelligent technology.
This is concerning, and not only for the foregone savings. Recent industry research indicates that the purpose of corporations is undergoing a paradigm shift to embrace goals beyond profit.
For instance, researchers at Harvard and the Wharton School of Business found that companies with high levels of purpose are already outperforming the market by five to seven percent.
Another recent study from the University of London found that intelligent tech and automation will make work more “human” as it frees up people for work that machines can’t do. This involves skills like empathy and creativity—and the pursuit of purpose and trust.
So how can business leaders prepare the workforce for the impact of automated tech? In my next blog post, we’ll explore this question—and present a powerful new way of thinking about the workforce in this age of disruption and automation.