The last three weeks have witnessed the severity of the COVID-19 pandemic hitting the shores of almost all nations and disrupting millions of lives. The ensuing hardship has been felt across every tier – from national economies to the common public. As the situation is continuing to precipitate, more and more people are now observing social distancing and businesses are migrating to a work-from-home model. This had clear ripple effects in the operational efficacy and productivity for critical sectors such as the banking and capital markets.
Unimaginable Challenges to Business Continuity
Financial services firms have been impacted in every aspect due to this crisis. No longer can they risk engaging in work related travel, attending events, or congregating with teams in the same office. Leaders are being forced to alter their fundamental approach to business and step outside their industry comfort zones. Today, these firms are adapting to restrictions by deploying new workplace systems such as working from home, rotating shifts, and split up work sites.
The financial services companies have been quick to respond to the COVID-19 crisis by triggering their business continuity plans. It’s important to note, that none of these plans could have imagined the current pandemic as even possible. No contingency plan could have factored in the possibility of national lockdowns, suspension of commercial services, quarantines, institutional closures, travel restrictions, and depletion of common resources. Not just for one region or country, on a global scale.
At no point in modern history has such an event ever occurred, affecting nearly every place at the same time. In fact, the most recent instance of anything even remotely similar was the Ebola virus in 2016. And while it garnered its fair share of attention in the media, it was severely limited across specific geographies with about 11,000 cases in three years. The COVID-19 pandemic on the other hand has over 873,000 cases (as of 1 April 2020) in just a three-month period.
Covid-19 Impact on the Banking and Capital Markets
In more specific terms, the impact on banking and capital markets have been devastating. Let’s not forget, that even before the pandemic became a factor, the overall market was in a slump. And while most businesses would have endured a natural economic down, the impact of the pandemic on supply and demand side has been unprecedented. In less than six-weeks, there has been a drop in equity markets, bond yields, and oil, erasing trillions of dollars across every asset class.
This has naturally raised the pressure on banks and capital markets, pressing on their liquidity stress and winnowing their access to credit. And while banks have looked to regulators and the government to help ease their capital requirements, the debt market has been in intermittent freefall with nearly 50% of investment-grade offers barely holding a triple-B rating.
In spite of the disruptions, businesses in the banking and capital markets have continued to work for and with their broader customer base to instill reassurance and ensure a continuity of operations. This is where digital solutions have truly proven to be instrumental as shared services have become the backbone of support during these trying times. Rarely ever has the reliance on digital process operations been as intense, forcing service partners to truly push themselves beyond the extra mile. Despite the overwhelming uniqueness and scale of these challenges, the ability to rapidly adapt has only been possible, thanks to technology and digital initiatives.
Through all of the disruptions, businesses in the banking and capital markets have continued to work for and with their broader customer base to instill reassurance and ensure continuity of operations.
Empowering Business with Digital
As operational processes have shifted away from traditional modes, the reliance and stress on shared services has increased tremendously. While many of the problems plaguing businesses are found in shared services providers also, the advantages of digital initiatives have proven instrumental in mitigating widespread inefficiency. The typical set-up of having large number of people in cross-functional teams working closely is just not possible. But with automation and digitalization of services, people can focus on collaboration. The need to shift work online is now more critical than ever and technologies like video conferencing are proving invaluable to facilitate collaboration.
Thanks to the adoption of smart digital solutions, shared services companies can ensure that they are able to provide uninterrupted back-office support to their international clients. A key focus area here has been to ensure that teams bound by work-from-home restrictions are able to stay connected and collaborate with high efficiency. The adoption of digital tools and platforms is also helping managers ensure high stability and transparency across their operations commensurate with client expectations.
With the cooperation of their clients, digital process operations can now equip their remote workforce with the tools needed to work without obstacles. By installing secure access nodes across devices, employees can continue to execute their duties even while off-premises. The use of secured virtual machines with remote access is being used to ensure data security within the compliance requirements.
A key area of operational empowerment has been the use of intelligent automation tools such as chatbots and IVR, which can help manage the scale of work during these circumstances. By scaling up the use of Robotic Process Automation (RPA), shared service provides can compensate for the drop in the human workforce while ensuring high quality, productivity, and efficiency for their clients. Overall, it is only those shared services that solely rely on the volume of human workforce that are finding it difficult to adapt.
As the entire shared services market finds itself under pressure, we can’t help but acknowledge the value of digital solutions for critical industries such as banking and capital markets in ensuring business continuity. In the weeks and months to come, as we emerge from the current crisis, the lessons of this experience will surely help the financial services industry move forward to reimagine their ways of working and double down on their digital ambitions.