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Taking stock of COVID-19     |     A gradual or partial return to the office     |     Real estate re-assessed     |     New management skills – new productivity challenges     |     Investing for transformational change

 

As with many major employers with large workforces, the ‘working from home revolution’ that COVID-19 started has had particularly significant implications for banks. What’s more, as banks provide truly essential services that individuals and businesses rely on, the imperative was clear to get it right.

In the short term, the result has been impressively successful, with a workforce-wide transition rapidly managed. In the long term, an opportunity exists to redesign and rethink how banks organize themselves for the new reality: a once in a lifetime opportunity in fact.

Taking stock of COVID-19

To fully take advantage of this, it is important that banks reflect and take stock of what they have learned about their customer behavior and preferences, their employees adaptability and willingness to change, and opportunities for improvement in processes, technology and security, and review the implications of these factors on future operations.

While the move to remote working was relatively smooth for most back office staff, it created challenges in the front office teams who were used to dealing with customers face to face. On the contrary, the volume of customer inquiries for financial reprieve as well as application for government-backed loans or forbearance agreements put significant strain on operations teams. Many organizations needed to rapidly re-size their operations teams, on-boarding a large and temporary workforce to assist with processing.

As banks enter the next phase the focus will be on loan servicing and forgiveness and understanding the financial health of customers coming out of COVID-19. KPMG Nunwood research, conducted June 2020, found that 40 percent of consumers feel financially constrained. This requires reskilling and equipping the workforce to be interacting with clients in different ways, having more frequent and often sensitive conversations.

… 40 percent of consumers feel financially constrained. This requires reskilling and equipping the workforce to be interacting with clients in different ways, having more frequent and often sensitive conversations.

Teams will need to do this at the same time they are dealing with the slow and staged re-opening of society, of markets and of physical office spaces, and the anxieties and stress this can bring.

A gradual – and partial – return to the office?

Banks globally are devising approaches to ‘return to work’. Some are already returning physically to the office, although to date this has largely been limited to risk management and trading functions. Those with branch networks are questioning the extent and location of reopening, having seen a significant uplift in online customer banking.

What is not in question is the careful and gradual approach required to ensure employee and customer safety is of highest concern. The ‘new reality’ workplace will not look and feel the same and won’t be a return to how things used to be. Discussions with organizations found that only 20 percent of their employees want to return to the office full time, a further 20 percent would like a hybrid model where staff have an option to work from the office and remotely, and the remaining 60 percent would like to remain working from home, coming into the office for special meetings or events, or when face to face collaboration is needed.

Real estate re-assessed

The requirement for corporate real estate is sure to shrink. However, that is probably a little way off because until a vaccine is found, employees will need to remain 6’ apart, essentially doubling the office space required per person that returns to the office, quickly filling up the existing property footprint.

KPMG in the US estimates that banks could save up to US$10,000 per employee per year by reducing office space,1 clearly there is a compelling downsizing case. However, this should not be a simple matter of slash and burn – banks should take the opportunity to reimagine how they operate, how they interact with their customers, how their employees, brokers and third parties interact in this new normal and re-think what they need either physically or digitally to deliver on that experience.

In addition, traditional back office and operations functions were previously geographically bound for talent pools. We are likely to see an increase in the labor markets, particularly for these areas because banks can now tap into a workforce that can work from home. To fully leverage this, they will need to be more flexible in how they look at the average workday, adopting more gig workers, and agile models to support customer needs. All of these factors have a huge impact on what banks need from a real estate perspective. It will literally be a case of ‘watch this space’.

New management skills, new productivity challenges

Indications are that, overall, productivity amongst bank staff held well or in fact may have increased during the COVID-19 crisis. This may have been something of an initial ‘sugar hit’ and employee engagement should be monitored closely. Many staff have had to juggle work and life as never before – home-schooling children, caring for other family members, working unusual hours – and this takes its toll. Many banks are reviewing and easing performance goals and metrics, acknowledging that employees must believe in their ability to achieve these to remain engaged and productive.

In the new models that we will see arising, the very nature of leadership and people management will change. Leaders will have less frequent ‘corridor’ opportunities to engage with their team members; they will not be so easily able to judge how a decision or requirement ‘lands’. They have to strike the balance between creating autonomy and accountability whilst providing the structure, tools and support necessary to be a leader. Equipping leaders with the people and management skills for a changed future will be a key driver of success.

Equipping leaders with the people and management skills for a changed future will be a key driver of success.

The role of the leader and manager in maintaining productivity is paramount. What this means for the longer-term is that banks must find the right ongoing balance in which they can support staff fully in a more distributed world, helping them stay motivated, productive, focused and engaged. Mental health and wellbeing support mechanisms will be especially important.

Investing for transformational change

Rapid digitization and automation has occurred and will need continue across the banking platforms. Banks have achieved in 3 months what they had planned across multiple years. To fully leverage this significant leap frog event, they will need to re-stack, re-purpose and upskill talent to deliver higher value work, including analytical or advisory activities that improve or enhance the customer experience. In some jurisdictions, such as Australia, there has also been a focus on ‘multi-skilling’ – ensuring that staff are trained and able to support in key customer facing roles or tasks as well as their day job in order to provide more resilience in the event of future unexpected crises. Additional skills will be needed to ensure digital solutions are designed with a consistent and connected customer and employee experience in mind. In particular, data scientists and engineers, solution architects, design thinkers/architects and program and change management skills will be in high demand. If they are not already, investment in talent now, is paramount.

COVID-19 has already taught banks that they can operate in a different way. Now, the challenge is to listen to their talent and customers, learn from what they went through, and be deliberate in creating a sustainable blueprint for the future. It is an exciting, and unprecedented, opportunity for transformational change – don’t miss it!

Footnote

1 Work anywhere, together, (PDF 176 KB) KPMG in the US, June 2020

  

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