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David Murphy Talks to ‘The Banker’

The Banker Podcast, Banking under pressure Episode 15: How Covid-19's impact pushes bank digitisation 

David Murphy, Publicis Sapient’s Financial Services Lead, talks to Joy Macknight from The Banker Podcast about how the economic impact of Covid-19 is pushing banks to digitize and what they need to be doing to help employees and customers during these uncertain times.


Joy Macknight: Hello, and welcome to the Bankers’ podcast series “Banking Under Pressure,” interviewing industry experts from around the world to gather insights and advice on specific challenges, best practices and innovations that can help banks and their customers manage during these tough times. I am Joy Macknight, the managing editor of the Banker and my guest this week is David Murphy, managing partner for Financial Services International at Publicis Sapient, a digital business transformation company. Thanks so much for joining me, David.

David Murphy: Thank you. It is great to be here.

Joy Macknight: So maybe we can start sort of at a very high level and really talk about how the COVID-19 pandemic is really impacting the global economy.

David Murphy: So in terms of impact on the global economy, clearly, it's been an unprecedented one, it's a health crisis that many generations -- you could almost argue all generations -- have never experienced. The last big global pandemic was probably in the late 1950s, and the economic impact that we are facing right now is unheard of. I think it was just yesterday, the IMF said, the impact of COVID-19 could be equal or worse than the Great Depression the 1930s. So, clearly, you know, and we do a lot of work it actually I spent all my time talking to banks and financial institutions, the financial crisis 12 years ago pales in comparison at the moment.

Joy Macknight: Right. So maybe let's go on to the next question I had, which is really around sort of the unique challenges that is facing the financial services industry in particular.

David Murphy: This is the first time in at least 12 years, 15 years where banks are really not the cause of the crisis. From a capital perspective, they are well prepared, they have strong reserves. And this time during the crisis, unlike previous crises, you know, they're the ones that the government and people are looking to essentially help customers, small businesses weather this crisis and support their growth when the lockdown ends. With that said, there's still some challenges that banks are facing some have been existing challenges that they they've seen forever, and others are net new. The one common challenge that is only worsened clearly is the interest rate environment, moving from what were already significant lows before the crisis to as close to zero as you possibly can get now, which clearly doesn't help banks. And then there's a set of unique challenges that have come up, courtesy of the crisis, the first being just, internally for the bank's, just a massive workforce displacement and they've worked to mobilise the number of business continuity plans. And I think what's come out of that process is actually the business continuity plans have never envisioned a scenario where you actually couldn't move a workforce to another backup location, but actually had to have a workforce working from home. You add on that the government interventions in the economy, so banks are now being asked to provide government backed loans for small medium enterprise businesses support mortgage holidays, their customers themselves are drawing down their credit facilities. I think JP Morgan just yesterday mentioned that they've seen an unprecedented drawdown of credit facilities among small medium sized businesses. And I guess what this is all leading to for banks more anything else is the types of servicing needs they have today among their customers are becoming more and more complex. So the small percentage of high complex servicing needs are now becoming the effectively a day-to-day interaction that their call centres and their online services are having.

Joy Macknight: Let's dive a bit deeper into the whole, you know, remote working situation. How can banks best adapt to this remote employee, but then also the consumer base, because a lot of banks have now shuttered their branches. So how can they best adapt to this new situation?

David Murphy: There's a few things they can do, I think that the first though, requires a recognition that a lot of banks, I would say before the crisis had thought they had completed at least version 1.0 of digitization, maybe version 2.0 and were feeling pretty good about the trajectory they were on. I think what the crisis is highlighted more than anything else is that actually banks need to accelerate their digitization efforts. And you see, just the massive challenges banks had with dealing with a workforce that had to operate remotely, call centres have struggled enormously, and the servicing needs that they're facing are unprecedented. So I think as banks adapt, clearly, there's an immediate set of responses they need to put into market and that's really just actually enabling themselves to meet the immediate needs of their employees and their customers. A lot of that is putting in the right remote working infrastructure, adapting to new ways of working. Our belief is, actually, there's going to have to be a readjustment as well in terms of how the banks think about the world going forward. You have you have two elements that you know, some of which may become permanent, some of which may recede over time. So, one is from a permanence perspective, the digital channels, the contact centre channels, are the exclusive channels that customers are using today, and it was already digital was already at a high percentage, 70 plus percent in the UK from a usage perspective. And now, our belief is actually this is going to become permanent, so it's accelerating. So we're thinking about what can you do to offer customers in the near term for the next six months, twelve months, it's providing the education tools to help customers manage their finances and businesses in this disruption. It's thinking about your cash flow lending products for small, medium enterprise businesses as they're dealing with massive disruption in their supply chain. And actually, and this is something we're starting to see a number of our clients focus on right now it's thinking through new approaches to making decisions. So how can you pull in new data sets based off of what's happened with your customers, they've clearly had an enormous disruption, and rethink how you actually want to evaluate their suitability for loans and additional banking products. So there's some pretty big readjustments that we're seeing our clients needing to make it with this model where you have a shift to digital as well as a customer base that is actually really struggling. And then our belief is if you if you kind of respond to the immediate needs of the crisis readjust to what is happening in the market. The last thing is also a recognition that you know, things will return to normal and once we move out of these lockdowns, people will start to spend again, people want to buy homes, they'll want to restart their businesses, some people will need to close their businesses. As you think through that scenario, the types of services that you're going to want to offer to your customers, be it everything from helping them rethink their wealth and pension from a replanning perspective, providing an opportunity for small medium enterprise businesses to work with their retail customers who are in need of jobs, thinking about how to actually help people leverage the identity that they've created with their bank, to be able to access other services as things come back online. There's a number of innovative ways that banks can essentially prepare themselves to start growing once people come back into the workforce and the economy does turn itself back on.

Joy Macknight: Do you think this situation has really pushed the role of banker into a purely digital experience? Do you think this is now the new business as usual and even after the crisis, after things sort of go back to normal as such, really do think that the whole digitalization journey is just taking this massive step forward?

David Murphy: What the crisis is doing is more than anything else is accelerating what was already in place. So we don't necessarily see that there's a new world order that's going to exist at the end of the crisis. But there's people that have already been moving down paths of change of rethinking their businesses and all this is doing is accelerating it. So from a banker perspective, absolutely, more and more, the interactions with customers will move into digital. It was already actually a very high percentage rate just in the UK, over 70 percent and all this is doing is just accelerating that, you'll never get close to 100 percent. There will always be time for when people need to speak to representatives in the contact center and in the branches. More and more what we see is this is just accelerating it. We have a client of ours who is keeping a list of all the things that he's asked for in the past three years that he was told were impossible and all of a sudden have become possible in the past 10 days out of necessity. Here’s a great example, one of the big challenges he saw in contact centres was when they were being overloaded, he had asked his teams, why can't we just send calls to the branches and he was told for three years is impossible and lo and behold, within 10 days of the crisis, that became possible. So, I think what you're seeing all those last hurdles from “I can't really do this digitally” or “this is too impossible to really support,” they're just being overcome today and then that will become the new normal going forward.

Joy Macknight: Well, thank you so much for your insights, David, and thanks to our audience for listening. This podcast was recorded on the 15th of April 2020. Keep up to date by subscribing to our weekly podcasts on it In Spotify and acast and follower discussions at the

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