By NICOLE SAWYER, Senior Editor, Bloomberg Live
Part Two of The Future of Finance: Leveraging Digital Transformation for Business Continuity, Bloomberg’s virtual round table series, kicked off with senior global executives’ discussing how financial services leaders are utilizing digital transformation to adapt to a looming global recession, improve business continuity during the Covid-19 pandemic and prepare for the future.
What is Covid-19’s lasting impact on business models? What is the next generation of digital and how are leaders prioritizing future-forward tech trends for the financial services industry? With so many businesses planning to leave a majority of their employees working remotely, even when it’s safer to go back to the office, what does the future look like? How do you ensure productivity, collaboration and security?
In this round table, we spoke directly with c-suite leaders about how they’re juggling priorities and how they’re trying to answer these questions. This roundtable leveraged the collective and individual expertise of these chief executives to unearth insights as they look for long-term solutions. Here’s what they had to say.
Noémie Ellezam, Societe General Chief Digital Strategy Officer Innovation Division
Rob Elsey, Bank of England Chief Information Officer
Michael Gorriz, Standard Chartered Group Chief Information Officer
Neesha Hathi, Charles Schwab EVP and Chief Digital Officer
Donie Lochan, Invesco Chief Technology Officer
Diane Lye, Capitol One EVP and CIO for Card and Small Business Technology
Wendy Redshaw, RBS Chief Digital and Information Officer
Gerard Smyth, Ameriprise Financial EVP Advice and Wealth Management Technology
Likhit Wagle, IBM General Manager, Global Banking
Dory Wiley, Commerce Street Capital CEO
Annie Massa, Financial Reporter, Bloomberg News
Click here to view the full discussion.
How Will Businesses Adapt to a Deeper Global Recession?
Coronavirus has wreaked havoc on the world economy. In response, the International Monetary Fund downgraded its outlook for the global economy, predicting GDP will shrink by 4.9 percent — down from its 3 percent prediction in April. Bloomberg’s financial reporter Annie Massa kicked off the conversation with Donie Lochan, Invesco’s Chief Technology Officer, addressing how businesses are facing the future, which could include a deeper global recession dragged out over a longer period.
Lochan is watching the future impact on real estate from a cost perspective as companies embrace a more flexible work environment. He discussed how the pandemic forced Invesco to create new models so its employees could work smarter and more agile virtually. The use of digital collaboration tools and “robotics processing” to automate manual processes and accelerate initiatives around “efficiency and cost optimization,” were particularly beneficial, he said.
Rob Elsey, Bank of England Chief Information Officer, said while Covid-19 is a tragic event, the pandemic has “given us a renewed momentum” and brought to light opportunities for future business outcomes.
“I.T. is no longer a service provider, it is very much more an enabler and it’s a differentiator. You need to sit down and figure out what is considered a commodity service to you and therefore maybe you rely on other people to do it. Which things you’re just an intelligent buyer of and are still things that you run but you take less of initiative and then what are your real key differentiators. In our case that would be analytics, large scale payment systems, and cybersecurity,” he said.
The Next Generation of Digital
Elsey was followed by Neesha Hathi, Charles Schwab EVP and Chief Digital Officer,
on the key role, technology has played in advancing business models during the Covid-19 crisis and beyond. “We believe that there are many more clients who really prefer the digital channels and we think that that’s a longer-term trend,” she said. “We’re going to need to continue to find ways to make sure that the human connection is still delivered even when clients are primarily engaging with us digitally.”
Diane Lye, Capitol One EVP and CIO for Card and Small Business Technology, sees a similar trend in how customer behavior has changed as a result of the pandemic. “We’ve seen a massive acceleration in digital adoption among our customer base,” she said. “One of the big opportunities of the pandemic has really been to meet our customers where they are and provide them with the digital tools both online and mobile to service their account more or less completely digitally.”
Wendy Redshaw, Chief Digital and Information Officer for RBS, developed a hybrid model, both physical and digital to meet the needs of her customers. “We encourage customers only to come into the branch if it was absolutely necessary to protect them and to protect our branch staff,” she said. “We quickly stood up some dedicated customer helplines and that was for the NHS vulnerable and the self-isolating customers. We introduced a companion card so that the vulnerable and the elderly could have trusted volunteers to do their shopping for them. And we introduced a way of delivering cash to people, we had something like 400-thousand pounds of cash over a thousand customers since the 25th of March.”
Redshaw added, “We also noticed that we had a significant adoption in ages 50 to 70 plus of our digital channels. Because we found that it was education that in some cases that stopped them moving that way, we actually released a range of very simple ‘how-to’ videos to get people digitally active.”
Likhit Wagle, IBM General Manager for Global Banking, (IBM sponsored Bloomberg’s virtual event), pointed out how despite the tragic events of Covid-19, the pandemic was a positive step forward to accelerate digitization.
Michael Gorriz, Standard Chartered Group Chief Information Officer, agreed. He saw positive trends in the use of digital platforms, the transactional side, and employee productivity.
“It just came at the right moment. We have rolled out all these digital capabilities around the world or in our footprint which is Asia, Middle East, and Africa,” he said. “And I have to say the usage was kind of subdued before. When Covid hit us and we saw the lockdown happening from east to west, no surprise that all the servicing pieces of the digital capabilities, they were used. In the first couple of months, we had a 30 percent jump in digital transactions, 43 percent more mobile digital users, 238 percent growth in online mutual funds usage and trading platforms.”
He said, “What was actually a positive surprise is that the digital sales channels picked up massively. We saw on credit card digital sales a 71 percent increase year over year. I mean this happened because we had the platform in place but it was not used; as I said and due to the circumstances customers jumped on it.”
“Can we live all digital. The answer is probably no because we saw a few products where we had a little bit of a dip in sales,” he added.
Remote Workers are More Productive
Contrary to the assumption of some that more remote workers means a less engaged workforce, Gorriz talked about a positive increase in productivity from employees working from home; Gerard Smyth, Ameriprise Financial EVP Advice and Wealth Management Technology, agreed.
“As we think about work I certainly see my agile teams and other teams more using the office as a part-time experience working together for strategy sessions, probably the rest of this year and into the next year,” Smyth said. “What I hear from the mobile team is that they don’t go back. They think considerable amounts of the business will be done virtually. So I think that has implications for how we think about technology.”
Endpoint Resilience in Remote Work World
Cybersecurity remains a key threat as companies increasingly plan for at least some of their workforce to remain remote, even when it’s safer to go back to the office.
Rob Elsey and Donie Lochan discussed how the cybersecurity landscape has always been a top priority for Bank of England and Invesco. Covid -19 has not changed that. What has changed is the level of sophistication of cyberattacks and where companies need to put their emphasis on preparing their employees who work remotely.
“Cyber response in a time of crisis is always a challenging thing especially when there’s a big shift in the way in which people work,” Elsey said. “What has changed is the need to make people more aware. So if you go back a few years, you will see it was all about data and ransomware attacks on individuals. And now all of a sudden you see people using Covid as a smokescreen for phishing attacks.”
Lochan said, “Previously the amount of time that you would put in the building and physical security for example versus maybe cybersecurity is shifting. Because now we’re seeing an uptick in cyber-attacks. Now you have to potentially do that on a wider scale because you have the whole employee base at home. So there is education and awareness that we didn’t have to do before that we now have to do it at scale. Many firms will start to look at business continuity planning. When a disaster happens, do I really need these physical sites?”
“And then disaster recovery is quite complex. We’re looking at that right now. Doing that completely remote is quite challenging compared to previously where you do need people physically to go into data centers,” Lochan added.
How the Competitive Landscape has Changed
On the topic of competition in the financial industry – especially in relation to newer challengers like fintech companies – Noémie Ellezam, Chief Digital Strategy Officer for Societe General’s Innovation Division, discussed new digital usages emerging during the crisis. She said “the volume of transactions has doubled” on we.trade, a blockchain-based trade finance platform. And half of the volume was coming from new corporate customers. She believes the crisis made customers more comfortable taking risks.
“Competition will be marked by the degree of cooperation between the different kinds of financial players. The ones that are going to be able to survive and develop after other crises are players which are already very open to fintech and I think partnership definitely will be a new way that competition is operating,” Ellezam said.
Wendy Redshaw agreed “partnership is actually a vital part and she is especially passionate about putting innovation into the hands RBS customers.
“An organization really has to go further and faster. Biometric debit and credit cards allow you to use technology to use your fingerprint as you verify your transaction. But we actually even used a biometric key fob which if you have to say an older person that’s a really good way to actually get contactless essentially without having to carry a card around and lose it. We have things like customers being able to open a bank account using a selfie. So we did that in conjunction with the fintech startup,” she said.
“We also launched a thing called NatWest labs. And the idea of that is that we would co-create with our customers the sorts of things that they might like to see us developing and delivering. The good thing about that was it allowed the customers to have their say in shaping the products and services that they really wanted to use,” Redshaw said.
The Cost of Covid
In a zero-interest rate world, cost-cutting has become increasingly important Dory Wiley, Commerce Street Capital CEO, discussed how his company was forced to make cost-cutting discussions in a “hurry overnight” on real estate, people, and travel.
“First, one of the areas we found out we could operate on a whole lot less real estate than we needed before. So our workspace in New York,” he said. “As far as people and course divisions that weren’t so profitable we all got lean and mean. We’re not sure how bad this economic environment is going to get. It’s going to take a while for all this to roll through the system. So we just got rid of some unprofitable areas and we’re trying to focus on areas that are working right now and that we can deliver and that there is demand. Our travel expenses have been cut probably more dramatically than anything else in the firm.”
Wendy Redshaw said the climate is important to RBS and they looked at ways to cut back on real estate. RBS made cost-cutting decisions looking through a sustainability lens. “Our CEO Alison Rose came out with a statement which is that we’re a purpose lead bank,” she said. “Our purpose is to champion potential helping people and businesses and families to thrive. We also should be thinking about our climate thriving: Is this building needed? Would it be better for the climate if we didn’t have this highly air-conditioned building for example.”
This roundtable was proudly sponsored by