|They are known as Black Swan Events – economic recessions and pandemics, that literally change the trajectory of governments, economies and businesses, altering the very course of history. The Black Death (bubonic plague) in the 1300s broke the long-ingrained feudal system in Europe and replaced it with the more modern employment contract. A mere three centuries later, a deep economic recession ensued, thanks to the 100-year war between England and France, which kick-started a major innovation drive that radically improved agricultural productivity.
Fast forward to more recent times, the SARS pandemic of 2002-2004 catalysed the meteoric growth of a then-small e-commerce company called Ali Baba and helped establish it at the forefront of retail in Asia. This growth was fuelled by underlying anxiety around travelling and human contact, similar to what we see today with Covid-19. The financial crises of 2008 also produced its own disruptive side effects. Airbnb and Uber shot up in popularity across the west as the subprime crises meant lower savings and income for the masses, forcing people to share assets in the form of spare rooms and car rides to cover for the deficit.
With Covid-19, we are already seeing early signs of a shift in how consumers and businesses behave. Remote working is being encouraged by tech and non-tech companies alike, airline profitability is getting impacted by low seat occupancy, supply chains are getting disrupted globally and retail stores are running out of ibuprofen, dry goods and toilet paper en masse. Some of these changes are direct, short-term responses to the crises and will revert to regular levels once Covid-19 is contained.
However, some of these shifts will continue, creating a long-term digital disruption that will shape businesses for decades to come.
Making the case for digital transformation used to be challenging. Getting institutional buy-in until Covid-19 and national lockdowns were tricky, with key stakeholders hoping to minimise costs, risk, and in many cases, a change to the status quo. The reality, however, is that digital-change was fast-tracked all around us. As technology develops and the impact of Covid-19 is felt for years to come, we will see changes to the structure of competition, the behaviour of business and ultimately performance across industries. As business strategies shift, so too do the components of a successful business case that supports them. What does that mean for the home loan industry in South Africa?
WeApply subscribes to three rationales that support the business case for technology adoption. As we make our case, we will focus on market competition, financial pressures and customer experience as the primary key drivers.
There is no denying the major market shift that is impacting financial services and the banking industry in particular. Most traditional banks are fast-tracking the extended implementation of digital strategies and fully digital banks are gaining bigger market share. And recently, some non-financial technology companies, including tech giants and e-commerce businesses have entered into financial services. The way customers consume services has changed overnight and in order to remain relevant, we have seen companies making changes and noticed a shift in the lending market. The competitive changes can be classified as follows;
Traditional banks digitising. Digitisation is more prevalent these days, becoming the norm, especially in the new low touch economy brought upon us through the current pandemic. The majority of financial services companies have fast-tracked their rollout digital strategies. The rapid rise of neobanks and Fintech disruptors have pushed large traditional banks to develop competing solutions themselves, purchasing technology solutions from vendors, or partnering with Fintechs in order to advance digital strategies.
Digital disruptor banks. There is a global rise of neobanks or digital disruptors, now competing for market share and their funding is bigger than ever. Disruptive challenger banks are built to innovate. They can move faster than traditional banks because of their lean business models and aren’t restricted by out-dated legacy systems or the large costs of maintaining physical branches. The successful disruptors typically offer better customer experience and greater convenience at a much lower price. Their primary focus is on this customer-centric digital experience.
Tech giants and e-commerce. The tech giants, with their deep pockets and legions of loyal customers, are starting to offer financial services. The prediction is that non-financial technology companies will become major players in the coming years. These companies have a unique set of advantages: They have a vast amount of consumer data, enabling them to provide customised solutions, they can deliver new products and services swiftly and the solutions that they offer are often integrated into existing experiences with large customer bases.
The cost of doing business for financial service companies has increased significantly and big earning wins are not in abundance. In addition to this, margin compression is an industry-wide concern. Banks have a renewed need to innovate and find cost savings wherever possible. The period of strategic adjustment to meet the new market realities is the perfect time to consider how investments in technology, or partnering with reputable Fintechs can improve customer experiences and therefore have a positive impact on bottom-line growth.
A post-coronavirus world.
Covid-19 has been a terrible shock to the global economy as well as the countless number of individuals and families it has affected. Companies in the immediate term had to ensure health and safety of its workers, partners and suppliers first and foremost. Over the longer term, Covid-19 will irrevocably change the way businesses will compete, especially over the next decade. Firms that choose to capitalise on these underlying changes will succeed and the ones that don’t will get disrupted.
Care, creative thinking and new tools can address customers’ acute needs today and forge stronger ties in the post-Covid-19 era.
Particularly in times of crisis, a customer’s interaction with a company can trigger an immediate and lingering effect on their sense of trust and loyalty. As millions are furloughed and retreat into isolation, a primary barometer of the customer experience will be how the businesses they frequent and depend upon deliver experiences and services that meet their new needs with empathy, care and concern.
Now more than ever, people need extra information, guidance, and support to navigate a novel set of challenges, from keeping their families safe to helping their kids learn when schools are shut down. They want a resource they can trust, that can make them feel safe when everything seems uncertain and that offers support when so much seems to be overwhelming. A baseline starting point could be: staying true to company values and purpose. Digital platforms like WeApply directly support a customer-focused restructuring of the bottom line. Our key features, customer self-service and workflow automation help maximise the return on resource allocation. It allows our home loan support team to focus their time where they are adding the most value to the business and removes the need for face-to-face connection. Our team can serve as trusted advisors to customers during the home loan application while the digital platform takes care of manual tasks that once required much of their attention. Automation reduces human error, including data security breaches and entry mistakes, which can be extremely costly for companies. The results of these errors are expressed in many forms, including wasted time, financial costs, and an overall decline in a company’s reputation.
What is currently evident is that literally overnight, demand patterns have shifted. Customers now need digital, at-home and low-touch options more than ever before. Digital-led experiences will continue to grow in popularity once the Coronavirus is quelled and companies that act quickly and innovate their delivery model to help consumers navigate the pandemic safely and effectively will establish a strong advantage. Customer expectation has increased and the definition of excellent customer experience has expanded. In a post-Covid-19 world, the consumer is more empowered to demand what they want, such as simplicity and ease of use, efficient processes, and personalised experiences. Consumers are now shopping online more, and visiting branches less. They still want the convenience of communicating with a person, especially if they can’t find what they are looking for online. These changing demands mean that consumers want an omnichannel experience, which means that they want to engage through mobile, web, chatbots and in a lesser degree, in-person customer support centres.
The WeApply digital platform enables these touchpoints to become one unified experience while helping to meet our customer’s need for information and advice when and where they want it. In addition, the use of customer data and analytics help us make personalised experiences a scalable reality.
The Covid-19 crisis is destined to end at some point. We expect changes in consumer preferences and business models to outlast the immediate crisis. What is vitally important is that leading companies in this unchartered post-Covid-19 era will need to deliver on the new customer experiences that are emerging. Customers want a more efficient and transparent home loan experience making the drive for digital change imperative. WeApply as a digital home loan platform is driven to bring about change to the home loan industry in South Africa by offering our customers a unified experience seamlessly built around the digital capabilities they expect. With a personal touch that we pride ourselves in, we are confident that our better and more appropriate customer experience will drive two things – winning new customers and retaining customer loyalty.