The economic effects of the pandemic SARS-CoV-2 are pushing the struggle to the main industries of each country, conveying certain national economic crisis into a global one. If there´s no consumer of products and services, eventually, there will be no money to produce, and the shortage of products and services will bring us clear consequences, massive lay-offs, and breaks in the supply chain. To avoid the dramatic side of the economic crisis (increase in crime rates, lower tax collection, impoverishment of people, etc.) let’s only focus on the tools and resources that technology can provide as relief in the banking services as a critical and essential industry.
We are facing a global threat as never before, this pandemic has reached almost every country in the five continents causing thousands and thousands of businesses around the world close its doors temporarily or in the worsts of the scenarios, indefinitely. In the “new normal”, (as many specialists are calling the pandemic) people simply cannot live as usual: the risk of contagion is keeping us in our houses, changing our lifestyles in unexpected ways. These justified restrictions are, in one way or another, speeding up the radical transformation of certain businesses, like the banking and financial services. In the months ahead, probably the quarantine policies and the restrictions will be softer than today, but one thing is clear: the new normal will come accompanied by the speeding up of the automation and the digitization of the services.
From banking to e-commerce and delivery services, the need for safety, transparency, and efficiency is pushing forward the implementation of new technologies in great scale, massively in record time. We, the consumers (and mainly the younger generations), widely prefer the automation in our daily transactions of any kind: the usage of the cutting edge technology always left in us the feeling of cleaning and trust, and the tech companies know that.
Definitively, the transactions for almost any of the recently upgraded services in the new normal, is based in the linkage with banking: in some places, it is not possible to use Uber without a debit card, and the same for most of the delivery services. Even more, e-commerce simply could not work without an account profile backed by a personal bank account. So, one of the critical industries undoubtedly is the banks, and in lesser degree, the financial services.
As I have noted in past articles, the endeavors of the big technology players for speeding up the cloud adoption are very clear, since they have been the recent winners to help mainly small and medium-size banks in their journey for the full digitization of services. As Werner Vogels mentioned in an opinion published by The Banker: “That alternative for many financial institutions is the cloud. You might ask why one of the world’s most regulated industries is betting big on the cloud. The answer is simple. They can compete at speed, protect their customers, and get access to the most advanced analytical services, without breaking the bank”. In the short term, we are going to see them growing up in the portfolio of services provided by banks, and the improving of the existing ones, the new normal demands it.
Another big weapon of the largest tech companies in the AI, historically used and with a bright future within the banking industry. In the words of Chris Skinner: “Technological innovation will accelerate. The infrastructure we rely upon to work from home during the lockdown is delivered by AI-first companies: Google, Microsoft, Apple. In the same way, in our industry, the winners will be those who invest in building vertically integrated AI-first companies. Not only will they build a profitable business, but they will also dominate this industry.”
So, it´s not fortuitous the levels in the stock price of the 3 biggest names in the industry:
At this point, I don’t know if these big tech companies will be the undisputed winners in the race, but at least we know that the bankers, their shareholders and even their consumers trust their expertise to expand the services through adding more computation power and enabling smart systems. The ‘push’ needed to upgrade the capacity of the banking services was done unfortunately by the pandemic, but the increase of the adoption will be a decision of the market as long as it meets the demand for safety, transparency, and efficiency.