Banking & Finance

ITG is trusted by the top 5 banks in the Philippines in providing seamless technology and solutions to enhance their customer’s user experience. We comply with government-mandated standards to make sure that your business is in good hands.

Together, We Will Create Ways to Achieve Your Business’ Full Potential by providing:

  • Workflow & Process Automation
  • Auto-scaling for Workload Management
  • Providing Innovative Channels

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Navigating Banking to Emerge Stronger Digitally

Summary - Industry Impact of COVID-19

Banks have been investing in digital transformation for many years. COVID-19 is the ultimate proof point for the digital readiness of the banking industry. Everyone – employees and customers – is forced to work from home and consume banking services through digital channels. In this situation, digital strengths and shortcomings will become brutally evident. The demand for digital banking these days is surging to volumes never seen before. Everything has to be digital – external processes and internal processes. COVID-19 is truly an eye-opening event for the banking industry, and it will only accelerate the efforts to make banking “digital first.”

COVID-19 is not a financial crisis, but it will certainly impact the banking industry. The economic downturn will impact everyone; banks are not immune to it. Credit quality may deteriorate quickly in some areas, especially in sectors or geographies that are hit the hardest. Stressing on the financial performance, the low interest rates will put additional pressure on banks’ profitability. COVID-19 will undoubtedly drive further consolidation in the banking industry and also be an opportunity for new players to enter the stage.  

Limited Digital Capabilities
Remote Work Environment
New Competitive Offerings
Increased Financial Risks
Current Situation
  • Despite most banks having digital servicing, over-the-counter transactions such as check cashing for non-bank customers are still required.
  • End-to-end digital business processes, such as account origination, are often limited.
  • Cash-oriented services for some banks have been limited.
  • CSRs and call centers have been impacted by shelter-in-place policies as employees are instructed to stay home.
  • Social distancing is reducing the number of employees per meter.
  • Branch servicing has been impacted.
  • Neo-banks, nonbanks, and fintechs continue to change the competitive landscape in banking. They are digital-only, agile, innovative, and low-cost, and come with latest technology and no legacy.
  • Customers are looking for flexible new offerings that meet their individual needs during this crisis.
  • Margin compression impact is occurring from prolonged low interest rates – down to zero.
  • Operational costs are increased due to safety measures.
  • There is less liquidity, and asset quality is under threat.
Impact
  • Limited branch hours to support OTC transactions are occurring.
  • Banks are promoting digital channel use in their COVID-19 communications.
  • Digital channels are handling many of the branch and ATM transactions for traditional channel users, increasing digital transaction volume.
  • Call centers are seeing a higher workload per employee due to lower employee attendance and increased customer digital channel use.
  • Banks are looking to remote CSR services to offload overflow from the call centers.
  • Banks are moving to secure remote work models for business continuity.
  • Technology is a key enabler to reacting in a timely way to the new reality.
  • Banks will look for rapid deployment solutions for new entities with new business models.
  • Cloud deployment will be sought that is preconfigured, packaged for minimum time to market, and offers lower TCO.
  • Lower rates likely will lead to substantially lower bank earnings.
  • Banks need to remain vigilant about liquidity measures.
  • Banks need to stress test financials to plan for the future.
  • Remote work may increase costs for setup.
  • Fee income is likely to fall, driven by lower consumer spending.

ITG to Help and Enable

      1. Banks have closed branches, reduced hours, and deployed social distancing policies, making in-person transactions more difficult.
      2. Banks have turned to digital channels to help service and communicate COVID-19 information to customers who traditionally have used in-person services, including deploying virtual customer service centers.
      3. Essential branch services are still not digital, requiring in-person actions (such as signature card for account opening) to complete.
      4. Support for non-bank customer transactions are still required, such as check cashing.
      5. Banks are heavily promoting electronic and card payments instead of cash, impacting people who are underbanked, unbanked, or cash based.
      1. Due to shutdowns and demand disruption, banks are relying on a flexible workforce mix to serve and control costs.
      2. Banks have an increased need to locate skilled workers with highly valued expertise that are in high demand.
      3. Banks need visibility into the entire organization to better manage external workers and service providers.
      4. Banks need to ensure a remote working environment setup with access to right tools, content, and training.
      1. Changes in market forces and customer behavior are forcing banks to reposition now while also recalibrating for the future.
      2. Banks face the task of executing a portfolio of actions mitigating challenges arising out of the fluid market situation – a tall order to achieve unless a resilient system is there to rely on.
      3. Bespoke adaptations in customer contracts without unsustainable workarounds in systems are desired, de-risking banks and customers in a balanced approach.
      4. The push for digital adoption is triggered primarily by disruption in the physical branch banking model, the push for contactless banking, and demand for expansion of banking services to emerging ecosystems.
      1.  As a result of emergency interest rate cuts and potential increases in defaults, financial institutions will face significant new pressures on their net interest margin and profitability.
      2. In light of the crisis, spending patterns have changed and will continue to change. The CEO and CFO need to dynamically reprioritize all areas of spend in ways that are critical to the business. Banks are experiencing increased operational costs due to safety measures. A real-time view of purchasing patterns is needed.
      3. Functional leaders want to optimally manage their spend. The current economic scenario will force banks to reduce costs on a sustained basis to improve bottom-line profits.
      4. Now is the time for procurement to step forward, assume the role of strategic business advisor, and help their institutions and customers by skillfully navigating the current environment for everyone’s benefit. 
      1. Financial performance will take a hit across all types of P&L and risk dimensions – fees, interest, loan losses, expenses, credit exposures, liquidity, and more. To understand the financial impacts, banks need to employ stress testing and scenario analysis together with real-time, dynamic monitoring of financial/risk metrics.
      2. From a liquidity perspective, supply and demand shocks have stressed companies across industries, pushing them to draw down credit lines. Banks need to strengthen their liquidity management practices to support market liquidity and changing customer borrowing needs.
      3. Banks will need to provide modify/forbear loan terms for borrowers. Loan modifications and troubled debt restructurings introduce significant accounting challenges for banks.