4 Questions Financial Services Leaders Must Ask to Survive and Thrive Post-Pandemic

Those who do not learn from history are doomed to repeat it. Although not George Santayana’s exact words, the Spanish-American Philosopher’s sentiment serves as a lesson for the business world. After navigating through a major event, such as COVID-19, business leaders often focus on moving forward. This strategy has one major flaw, in that it bypasses any period of reflection and the learning that can help businesses recover and thrive post-crisis.

As we continue to move through this current crisis, we can begin to see the future. Financial Services leaders need to pause briefly to reflect on the past to avoid repeating it. In this case, the goal is not to avoid repeating the crisis — as crises, such as natural disasters and global pandemics, are often out of our control — but business leaders should avoid repeating flaws in their preparation for, or response to, that crisis.

It is also reasonable to expect that each crisis will be unique and unprecedented. Financial services firms have always made plans to anticipate a crisis (one only need to think back to the terrorist attacks on the U.S. on September 11, 2001), but they now must use more of their imagination to recognize that the next crisis will be unprecedented.

The good news is business continuity planning and strategic planning don’t have to be mutually exclusive. As we move forward through this current Coronavirus crisis, there are four important questions business leaders must address. The answers to these questions will help them not only prepare for the next unprecedented period, but also seize opportunities and thrive in the period between now and then.

Is my business aware enough?
Business awareness starts with having the right data. Data is the first area to be addressed as it is critical to successfully answer the other three questions. Historically, focusing on the data within existing applications was enough to drive business awareness. We now know that the world can change rapidly and customer preferences and behavior patterns are constantly evolving. Witness the rise of Venmo and digital service. Customers can now often get faster answers via Twitter or chat than by calling the call center.

On the supply side, we see how quickly supply chains of all types can be stressed and are often slow to react. Having the right data, both internally and externally generated, can help you stay ahead of both evolutionary and revolutionary changes to allow as much time to respond as possible.

Getting the right data is where the art and science of data management meet. In a growing volume of data and data types, organizations need to be able to assess external data quality and value in supporting the organization’s objectives. It also requires establishing confidence in the data through effective governance and rigorous controls. Everybody is familiar with “garbage in, garbage out,” and poor data leads to discarded downstream reports and analysis. Confidence is inspired when rigorous data governance principles are not only followed but reported. Hurricane maps for example, now focus more on the “cone of possibility” and the specific forecast track.

Is my business informed enough?
Awareness is a first step toward action, but increasing an organization’s data gathering capability leads to a second challenge: what to do with all that data? It is through the application of analytics that data is turned into information and insight.

Advanced analytics tools and techniques, such as those that apply machine learning and artificial intelligence approaches, can address obvious questions and typical performance indicators. However, data must be able to go beyond the easy-to-answer questions that tackle broader issues such as, “What is driving my customers’ behavior?”

By addressing broader questions, organizations can turn an awareness of a change in behavior by customers, suppliers, partners or other third parties into information about the nature of the change and the drivers behind that change. This is the kind of information necessary to properly form reactions to a changing environment, regardless if it is a global pandemic or another external crisis. Once a business plan is formed to react to the changing environment, the next two questions asses an organization’s ability to act on the information.

Is my business flexible enough?
If recent events have taught us anything, it is that change comes quickly. How long does it take to scale operations up or down? How fast can an organization shift direction to respond to changing market demands? Or, in the case of Financial Services, are firms quick enough to respond to legislative action expecting them to begin accepting loan applications within days?

Successful organizations of the future will be defined by flexibility to respond to changes in direction, as well as changes in scale. A first step in the journey toward flexibility is looking at the organization’s technology — their application and channel portfolio. Large complex application infrastructures are a major barrier to flexibility.

This barrier takes two forms. The first is the complexity of making the change and the amount of effort required to design, build, test and deploy changes. The second is the risk of unintended consequences.

As infrastructures grow more complex, many organizations grow naturally fearful of making changes, so they don’t break one part of the portfolio as they change another. These challenges are addressed by executing a portfolio rationalization/modernization plan to transform into something that lends itself to natural flexibility.

Is my business fast enough?
Having the ability to be flexible in response to external changes is important, but it’s not enough. True flexibility also requires speed. A good example of the need for speed is the government’s Paycheck Protection Program (PPP) that made emergency loans to small businesses. The program went live a week after the legislation was signed and banks’ small business lending organizations saw application volume that up to hundreds of times higher than normal.

Even with modern infrastructures, most responded with an “all hands on deck” exercise that took bank resources from elsewhere and put them to work processing applications. If the past is a good predictor of the future, this level of rapid response is reasonable to assume, although the driver may be different.

To achieve such speed, organizations must leverage the hyper-scalability of cloud infrastructure and the rapid deployment capabilities of DevOps architecture.

The COVID-19 crisis has shown that Financial Services organizations must be able to leverage data to drive awareness, analytics to drive insight, platform modernization to drive flexibility and the cloud to drive responsiveness. Those organizations that do will be positioned to respond to immediate crises as well as to achieve competitive advantage during the next normal.