Post demonetization in 2016 in India, people moved towards digital payments and banking system. But the adoption seemed quite slow. However, 2020 seems to change the face of finance sector forever. With the pandemic here to stay for long and the vaccines yet to come, this digital shift will happen on an escalated scale, which looks like a digital tipping point for the finance sector. At least till the COVID-19 impact subsides and the impact curve flattens, many businesses would have adopted and learnt to work in a digital first or let’s say digital-only market.

Though digital transformation was underway pre-pandemic, the not-so-urgent environment had put everyone on slow-tracks. But now is the time to act fast, and those who doesn’t will get lost in the maze of this crunch. However, this need has put the entire banking system under stress as the need for them to go digital is just the first step. It’s more about offering personalized digital solutions and being available 24x7 apart from providing them seamless services equaling face-to-face experience. This calls for greater agility and flexibility.

While customer experience matters, on the other hand monitoring and managing risk is being challenged by uncertainty as broad oversight of risks in the current turbulent times still remain behind smoked-windows. Also, as new opportunities exist to accelerate digitization, automation and cybersecurity practices, being a step ahead of cyber-attackers is yet another challenge as hackers are changing their way of attacks faster than one can anticipate. More digital workforce & customers bring more security threats to financial firms,

With the pandemic here to stay for long and the vaccines yet to come this digital shift will happen on an escalated scale which looks like a digital tipping point for the finance sector.

and hence companies need to educate their employees & customers parallelly to keep the security wheel rolling uninterrupted. And with work from home here to stay for long, it is testing management styles and operations. Companies need to be agile and act more human, as changing times need proactive management to maintain resiliency and preservation of company culture to keep employees connected.

Dealing with Financial Challenges
It was overnight that people’s lives, businesses and countries had to change. Though financial institutions immediately transformed their operations to safeguard their employees and serve their customers better, they still are dealing with recessionary economies. This brings the need to reconfigure their performing loans & defaults, low interest rates, credit compression and capital limitations. Financial firms have started to adapt their risk & fraud models too.

The Institute of International Finance projected a global GDP contraction of -1.5 percent for 2020 caused majorly due to lower inventory accumulation resulting from weaker demand globally. The financial institutions now fear higher credit defaulters, adding up woes to the already existing record of low non-performing loans. Hence they will have to act faster to cut more cost and uncover new savings & efficiencies, and become more nimble, flexible and resilient to market threats.