Banks Deploy Robots As Pandemic Shakes IT Plans

LONDON (Reuters) – When banks were inundated with loan applications from companies struggling with the fallout from the coronavirus pandemic, hastily-built robots helped several lenders cope with the deluge.

FILE PHOTO: A view of the Canary Wharf business district in London, Britain October 14, 2020. REUTERS / Matthew Childs / File Photo

Bots were one of many rapid technological changes made to the industry during the crisis, unlike the slow progress made over the past two decades to improve technology in the face of growing competition from fintech rivals.

Now, the shock of the COVID-19 pandemic has sped up the process, even though banks around the world are due to cut IT spending this year for the first time since 2009, based on data from research firm IDC.

“The bots allowed us to process a much higher volume of requests than we could have done before. This meant that the lead times didn’t get longer with the massive volume, ”said Simon McNamara, chief executive of UK firm NatWest, which has made more than £ 13 billion ($ 16.90 billion) in guaranteed loans. the state.

It’s a pattern that’s replicated in banks around the world, where technological changes that typically took months were made in days.

At Citigroup, the number of new accounts opened digitally by companies or funds in March increased by 300% over the previous year, while the number of those customers using its online services and applications increased by 25 %.

“We saw this trend before COVID, but it accelerated during COVID,” said Naveed Sultan, Citi’s global head of banking transactions.

“Traditional working methods have become almost non-existent. “

But as banks must budget for a recovery in loan losses from the pandemic, some projects, such as large-scale customer data mining to deliver more personalized services, may need to be put on hold, a study from IDC.

Global bank IT spending is expected to decline 1.7% this year to $ 200 billion, from $ 203.5 billion in 2019, according to IDC data. Growth is then expected to resume over the next three years, but at a slower pace.

Chart: Technology spending by the bank

CRISIS LOANS

Banks have prioritized automating processes in the face of increased workloads in the wake of the COVID-19 crisis, based on IDC surveys of bank executives.

Santander’s UK division deployed data analytics tools to speed up loan processing and credit checks as borrowers were strained.

“We had prepared but the volume was higher than expected,” Carlos Accordingke, chief technology officer of Santander UK, told Reuters. “It’s a big priority for us to make changes to increase our speed. “

Swiss bank UBS developed six bots in three days that have helped client advisers manage the huge influx of coronavirus crisis loan applications from companies in Switzerland, said Mike Dargan, global chief technology officer. group at UBS.

Banks have also prioritized moving data to the cloud to speed response times and allow more staff to work from home, while strengthening defenses against the growing threat of cyber attacks.

“We had four main focus areas, remote working to empower UBS employees, system stability as we saw a lot of volatility, cybersecurity and business continuity,” said Dargan of UBS. to Reuters.

‘MOONSHOTS’ PENDING

On the flip side, spending on consumer technology for branches and online services is expected to grow more slowly, from $ 31 billion in 2020 to $ 40 billion in 2024, according to IDC.

Other less urgent projects such as systems redesign and longer term digital projects known as “moonshot” are abandoned.

“Banks are struggling to deploy new software,” David Buxton, CEO of Arachnys, a startup that sells compliance technologies to banks. Many employees are still working remotely, which means they may not have the tools needed for new, more ambitious IT projects, he said.

NatWest ditched its nascent Bó digital savings brand at the start of the pandemic.

McNamara said the pandemic was a factor in the decision because there was high demand for the bank’s existing mobile app, which has added 700,000 users since the start of the pandemic.

Although banks have limited their overall IT spending this year to deal with the initial fallout from the pandemic, IDC has predicted that growth will pick up again from next year, with overall spending expected to jump by a quarter to $ 250 billion. dollars in 2024.

Industry experts say the pandemic has focused the minds of bank executives when it comes to IT spending and more digitally savvy lenders will steal a march on their competition.

“There is a digital divide,” said Jerry Silva, director of global banking research at IDC. “Sometimes I call it the predatory gap because these banks are going to be able to steal market share from those that weren’t prepared before 2020.”

($ 1 = 0.7693 pounds)

Reporting by Iain Withers and Anna Irrera. Editing by Jane Merriman

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