Ellen Carney, Principal Analyst, Jacob Morgan, Senior Analyst, and Vijay Raghavan, Senior Analyst
Like many other industries, the financial services industry has been forced to adapt to the new normal brought about by the coronavirus pandemic. Firms in the banking, insurance, and wealth management sectors have accelerated the shift to digital while trying to maintain a human connection in a very personal business.
In this special episode of What It Means, three of our analysts join us to unpack the impact of COVID-19 on the financial services industry. To start, Principal Analyst Ellen Carney describes the unique challenges faced by insurance carriers when they can’t conduct processes in person. Online claims and assessments are becoming the norm, but providers are also realizing that their customers are in a difficult position, as well.
“One of the things carriers are doing is offering rebate programs, leniency programs to address the diminished cash flow for businesses and consumers,” says Carney, adding that in the long term, the insurance industry could see significant consolidation as a result of the lost revenues caused by the pandemic.
In the banking sector, similar trends are taking place: An acceleration of digital services (think mobile and online banking) is happening at the same time as consumer fear about cash flow. Senior Analyst Jacob Morgan explains that in a time when physical cash is considered a virus risk, mobile and digital payments have exploded. Meanwhile, banks quickly recognized their customers’ pain and began suspending mortgage payments or offering credit extensions.
In wealth management, robo-advisor services are getting a true test because local branches have been closed. Senior Analyst Vijay Raghavan has been watching the trend closely and says the services that have human advisors behind them will fare better than those that are purely digital. “In these times of economic uncertainty, I think reputation will become more important,” Raghavan says.
While the long-term financial impact of the pandemic remains to be seen, the digital acceleration and increased customer empathy will continue, according to all three analysts.