The Impact of COVID-19 on Digital Transformation

“What have been the biggest effects COVID has had on digital transformation?”

Brett King, guest editor of the 35th edition of The Fintech Times, posed this question to me, wanting me to share some insights with the world’s FinTech newspaper.

This is a question that I've been doing a lot of reflection on now that 2020 — a year that certainly felt like the longest on record — is safely behind us. In a lot of ways, 2020 felt like one hundred years, an entire century.

So, what have been the biggest effects that the COVID-19 pandemic has had on digital transformation? Because what a century 2020 has been. There’s no question that COVID-19 has completely transformed our lives forever, and digital transformation is no exception.

An Agent of Change

For many financial brand leaders, change is hard. Change is uncomfortable. It's scary. 

The COVID-19 pandemic forced us to move outside of our comfort zones and leave our caves of complacency.  While there was a lot of painful turmoil and strife in 2020, this forced exit of the familiar was one good thing that came from this time. 

So many of us were trapped in these caves of complacency, where we found a false sense of security because we were informed by experiences and constructs that were rooted in the past. 

From what I’ve seen, it doesn't matter what vertical you're in, from marketing and sales to leadership, from education to financial services, from retail to healthcare, COVID-19 has been a massive agent of change on a scale that none of us could have ever imagined we would experience either personally or professionally.

Looking ahead now is the time to choose how we move forward as individuals, as teams, and as organizations. There are two options:

1. Remain stuck in a circle of chaos, where we feel confused, frustrated, and overwhelmed, hiding from the fear of what lies in front of us.
2. Come out of our “cave of complacency” with confidence to move forward, battle unknown fears of change, and blaze a trail towards a bigger, better, brighter future. 

We can learn from the lessons that COVID-19 has taught us and grow into something better. For this reason, I’m choosing the second option.

There is an opportunity in front of us to allow banks, credit unions, and the Fintech industry the chance to work together and finally put the transformation of people over the commoditized transactions of dollars and cents. 

Exposing Gaps We Need to Fill

The COVID-19 crisis has exposed massive gaps in both experience, expectation, and communication for incumbent financial brands, traditional banks, and credit unions. 

When I look out at the financial services landscape and think about COVID-19, it feels like a long-overdue trip to the doctor’s office. The one that got put off for way too long. Life got busy, and the patient didn’t have time to do what they knew needed to be done. And as a result? Now that the patient made it to the doctor, they feel sick and tired. 

After a multitude of tests, the doctor explains that the patient must make drastic life changes to their diet, fitness regimen, and daily habits, or the patient will experience a catastrophic, life-altering event. This can be a wake-up call, an opportunity for change. The patient leaves the doctor’s office feeling energized and excited about their healthy new future. 

We are all experiencing the same wake-up call right now. We have been blinded by gaps in experience and communication, but now our futures are ours to create with newfound courage and confidence. 

When it comes to financial services incumbents with traditional banks and credit unions, 2020 has been our trip to the doctor's office and COVID-19, our wake-up call. It has exposed capability gaps in the financial industry’s existing growth model, which was built for the physical retail world of brick and mortar branches.

The Consumer Buying Journey

Up to this point, many financial brands have simply been content to only dabble in the digital world as they've adopted digital and mobile banking technologies. But this created a false sense of security for many. They took refuge in their caves of complacency, thinking that because they adopted these new digital mobile banking technologies, they were already “digitally transformed.” But digital transformation is an ongoing process.

COVID-19 exposed numerous consumer experience, expectation, and communication gaps throughout the entire banking buying journey, both in the retail and commercial sectors. Before COVID-19, many thought that digital was just simply a way of serving consumer needs, primarily on the transaction side of the business. Now, we see it as an entire untapped avenue for the entire consumer buying journey.

In the future, the biggest opportunities for traditional banks and credit unions will be to reset, refocus and redefine digital growth in a post-COVID world. Now is the time to systematize processes that are centered around the modern digital consumer buying journey. 

What can this look like?

• Unifying marketing sales ops and IT teams to increase website traffic
• Generating leads from this website traffic
• Nurturing these leads with content and automation
• Converting these leads into loans and deposits

However, the only way that we can do this at a bank or credit union is to commit to putting the transformation of people in the communities that we serve above the commoditized promotion and transaction of making a profit.

Opportunity for Collaboration

But COVID-19 hasn’t just exposed gaps in experience and communication. It has also created a tremendous opportunity for FinTech collaboration. 

In a pre-COVID world, it was easy for incumbents to view FinTech as the competition that was slowly chipping away at market share. After all, FinTech was more nimble and faster to adapt and respond to changes in consumer behavior, consumer trends, and consumer demands. 

However, just as COVID-19 has exposed numerous consumer experience, expectation, and communication gaps throughout the entire buying journey, COVID has also created a challenge for FinTech. FinTech brands are also starting to struggle when it comes to gaining access to ongoing capital and funding.

Venture capitalists and investors expect that after COVID-19, there may be a wave of mergers and acquisitions in FinTech.

COVID-19 does not have to be the end of the road for FinTechs. 

FinTechs have been competing and working to displace and disrupt the incumbents. It’s a strategy rooted in scarcity because there will never be enough. But instead of competition rooted in scarcity, the opportunity for FinTechs is to transform that competition to collaboration that is fueled by a future of abundance, where there is more than enough opportunity to go around. 

Both incumbent banks and FinTech have something the other wants now more than ever before, in a world impacted by COVID-19: 

• FinTechs have the capabilities, the technologies, the operational mindsets that incumbents need to bridge the consumer experience, expectation, and communication gaps that COVID has exposed. 
• Incumbents have the audience and the access to communities, both digital communities, as well as physical communities, much more so than FinTech. This access to these audiences and communities is what FinTechs require for scale. 

Instead of trying to disrupt and kill off the incumbents like traditional banks and credit unions, the biggest opportunity I see for FinTechs and incumbents alike is to approach the future with shared abundance.

Peter Diamandis once wrote, “The future is better than you think.” We have an opportunity to collaborate and commit to transforming banking for good. 

Two Paths: A Peek Into the Future of Your Financial Brand

I look at COVID-19, and I see it as a preview of all the exponential changes that we will experience as individuals and as organizations over the next five to ten years.

In the age of artificial intelligence (AI), our overall mindset will be far more of a strategic asset or a competitive advantage than technology alone. Our mindset is what will maximize future digital growth potential in a post-COVID world.

There are, in fact, two mindsets to consider.

The first mindset is a fixed mindset.

The fixed mindset gets stuck dwelling on the physical world of brick and mortar, gloomily longing for “the good old days” that never were. People with fixed mindsets tell themselves they're never going to make it in this brave, new digital world. They believe they lack the capabilities that the other guys have. This complaint can quickly become a self-fulfilling prophecy. It's an easy way to avoid conflict, but it will lead to certain demise. Instead, you must commit to confronting challenges with courage and confidence.

The second mindset is that of a growth mindset.

A growth mindset looks out at the world with gleaming eyes full of hope and says, “Our best days have yet to come. Our best days are ahead of us. The future is bigger. The future will be better.” 

The future will be brighter for all of us. Leaders with growth mindsets are excited and energized about the future that they have the power to shape. They have the power to create.

Looking ahead to the future, our adaptability quotient and emotional intelligence will be far more important than our IQ in the age of AI. 

So what do we do? 

Put bluntly, we must get comfortable being uncomfortable in a post-COVID world. We must also be empathetic to others who might not be transforming their thinking, their behaviors, or their actions as quickly as we are on our own digital growth journeys from good to great — because digital growth is, in fact, a journey.

It is a journey that begins in the mind.

It is a journey of transformation.

Maximizing a financial brand’s post-COVID-19 digital growth potential starts with the individual. Only then can we move from the individual to transform the team and the entire organization. From there, we can truly begin to transform the lives of people in the communities that we serve.