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The unprecedented disruption caused by the COVID-19 pandemic has been significant and far-reaching for many organizations. While the specific impacts have varied from industry to industry and workplace to workplace, a common thread is that many have had to, or will soon be forced to, make remarkable changes to how they operate.
ABBL’s Digital Banking and FinTech Innovation Cluster joined forces with KPMG Luxembourg to conduct a study to understand how the COVID-19 pandemic has influenced operational, technological, organizational and HR aspects of financial institutions in Luxembourg.
Forty-three financial institutions answered a series of 30 questions online between 3 and 17 June 2020. The questionnaire was broken down into two main sections. The first section focuses on reaction and resilience: responding to the crisis and managing through uncertainty. The second section focuses on recovery and new reality: planning an exit from lockdown and adapting to the new world.
Read our key findings to find out the impact of COVID-19 on financial institutions.
The crisis has been regarded as an opportunity, by 60 percent of respondents, to clearly identify the weak elements in business continuity plans and address them. Over 40 percent of respondents believe they are now completely ready to handle a second wave, while only nine percent of respondents believe they are only reasonably ready. There were no respondents that believed they would not be ready at all.
Among other positive impacts indicated, respondents emphasized the fact that the crisis has allowed them to significantly increase the company-wide adoption of working from home and facilitated the development of remote working capabilities.
23 percent of respondents even believe they will reduce their organizations’ physical spaces within the next few years.
expect to reduce their institution’s occupation of physical spaces within the next year
Since the start of the crisis, a significant 37 percent of respondents had observed an increased amount of cyberattacks or fraud attempts on their institutions’ infrastructures.
In light of these exceptional circumstances, and to deal with these increased cyber or fraud risks, the vast majority of the financial institutions questioned have either set up additional manual controls (31 percent) or integrated additional IT security solutions and software (43 percent), both internally within their operations and also in their external connections and communications with clients and third parties.
With stronger cyber security systems in place, 42 percent of respondents have decided to set up or maintain a formal working from home policy for either specific, or a larger number, of positions.
Interestingly, before the crisis, most of the respondents (53 percent) did not allow any of their employees to work from home, while 38 percent had made it possible for certain specific functions and only 9 percent had made it possible for the entire employee population. However, in most cases, this possibility remained limited to one day per week.
Despite all the terrible impacts that COVID-19 has brought into our lives, there have also been some lessons learned and valuable observations to be made. The need to move operations into the digital space and provide remote working possibilities for staff members, at the same time as being able to provide great customer experience remotely, has catalyzed the development of the financial institutions’ digital agendas.
Thirty-nine percent of respondents were able to remobilize themselves extremely quickly, with no disruption or almost none, taking no more than two days to be fully operational —while another 30 percent needed three to five days to get back on track.
To ensure business continuity, financial institutions needed to rapidly re-orchestrate their activities, and enabling staff to work from home was one of the key priorities. Once the crisis hit, these institutions had well over the majority of employees (82 percent) suddenly working from home.
The crisis has been a strong accelerator of change by spotlighting our resilience, as well as our ability to adapt. Most respondents (63 percent) accelerated the development of IT solutions (workflow orchestration, RPA, OCR, digital signature, etc.).
In fact, over half of the respondents to the COVID-19 survey said that a positive impact of the crisis was that it allowed them to accelerate their digital projects.
With thanks for the Luxembourg Bankers’ Association (ABBL). You can read more about their work here.