The coronavirus has had a profound impact on all of our lives.
It has brought about radical changes that were unthinkable a mere six months ago – and many of these changes will remain in place long after social distancing measures are eased.
In the financial services sector, the global pandemic has further accelerated the need for technology.
Cut off from bricks and mortar premises, both businesses and consumers have suddenly been forced to manage their affairs remotely and online.
For consumers, what they require of financial technology – fintech – has evolved significantly since the UK-wide lockdown was introduced in mid-March.
Indeed, for many people, before the pandemic took hold their interaction with fintech largely involved using online and mobile banking platforms to check their accounts and transfer money.
Now, technology has become integral for those looking to take out financial products, open new accounts and receive financial advice; this is especially true in light of the number of people needing to access credit in this uncertain economy.
For some financial services firms, this rapid shift has proven extremely challenging, particularly given the lack of forewarning.
Their data, systems and processes are completely reliant on legacy technologies and on-premise servers; as such, delivering new products or enhanced services to their customers at a time when employees cannot be in an office or branch has become more difficult.
The role of the intermediary is changing
The sudden reliance on fintech poses many interesting questions, not least for intermediaries.
As consumers and businesses adapt to the “new normal” of financial services being delivered digitally, intermediaries like brokers and advisers must similarly come to terms with how they can continue to add value.
Intermediaries are faced with this pressing question: what role must they now play to satisfy the needs of their clients and customers?
Let us take a mortgage broker as an example.
Typically, they would have received an enquiry from a prospective borrower and, having assessed his or her requirements, the broker would have sourced suitable products from various lenders – perhaps based on preferred relationships.
This crisis will change the modus operandi.
Lenders will need to move to take advantage of cloud native technologies, if they have not already done so, to be prepared for the next crisis.
This will allow for manual steps to be removed from complex applications, onboarding and completion processes that almost everyone has experienced when opening a bank account, taking out a credit card or getting a loan of some description.
In the case of mortgage brokerages, there will therefore naturally be a shift towards marketplace consolidation based on who can provide the most volume (to the lender) and transparency (to the borrower) – a story that has played out in other sectors.