Five New Essentials for a Successful Financial Institution Playbook


Financial institutions have had to adjust their business models significantly over the past few years. They had to continue operations through the restrictions of the pandemic and adapt quickly to meet new customer demands and expectations, which increasingly skew digital. This meant improving digital capabilities and communications, implementing more intelligent technology, relying more on data analytics and becoming more agile, among other necessary changes.

Moving forward, with the economy in a continued state of flux and uncertainty driven by a variety of ever-changing factors, financial institutions must be prepared to continue adapting and evolving. Today, there are five new essential elements for a financial institution’s playbook.

1. Current Technology

Most financial institutions have had to get on board with technology in the past couple of years to ensure continuity of service. Digital capabilities have become essential to operations, and many customers continue to prefer them. For some institutions, small changes have been enough. Others have had to adopt multiple advanced tools to support their customers.

Customer communications are a top priority. Customers need to be able to reach financial institutions through a variety of channels, and they need to be able to do so effectively. However, providing excellent customer communications is challenging when there are labor shortages, issues with technology and digital channels, and so many solutions to choose from.

To meet the need, financial institutions have implemented solutions such as chat bots, virtual assistants, new or improved mobile banking and adjusted digital payment options.

Further, financial institutions have had to update internal technology to enable remote work and/or operate with reduced staff. Many have implemented new software and automated workflows where possible, and those new initiatives will help them sustain operations into the future.

What it comes down to is this: better technology is available, and it pays to stay current because you stand to benefit from advanced capabilities enabled by data analytics, automation, artificial intelligence and more.

New software and automated workflows don’t just help your organization fill in the gaps. They create efficiency improvements that save time and money. The right combination of technology can stabilize your operations and instill greater agility.

2. Extreme Scenario Planning

Financial institutions have learned a great deal from managing their operations through the pandemic and other disruptions these past years. One lesson is that you must scenario-plan for the most extreme worst-case scenarios. The world has changed and continues to do so, and the landscape for all scenario planning has changed in kind. Financial institutions must revise scenario planning with this new landscape as a base and spin out potential outcomes from there.

Scenario planning is particularly challenging and complex because you’re at the crux of the financial outlook in any disruptive scenario. If you’re scenario planning for a financial institution, lay out a number of possible outcomes based on the current state of your organization and your current data, then develop plans for each. Be sure to include one-off worst-case and best-case scenarios that don’t follow a traditional trek. Ask yourself:

  • What could happen globally?
  • What could happen at my institution?
  • What could happen with my customers?
  • What if there’s a major event or outbreak in my region?
  • What about new government initiatives?
  • How might the way people use financial institutions change and how can we get ahead of that?
  • What if people’s sentiments about debt change and how can we get ahead of that?

With each scenario, determine how your revenues might be affected and which actions you can take now to be well-prepared in the future. Financial modeling is a type of scenario planning that can help you determine the right cost containment measures and lending initiatives moving forward.

3. Data-Driven Agility

With the continued uncertainty and disruption to the economy, it’s clear that any business needs to have their finger on the pulse of all key functions of their operations — as well as an eye toward the future. Being able to monitor activity and behavior in real time is essential. Financial institutions need strong data analytics so they can respond to changes quickly, discover patterns and make qualified decisions based on historic and real-time information.

For example, with analytics, you can find patterns in customer behavior that would indicate they’re on track for bankruptcy or delinquency. You can then act to get ahead of this, extending terms or offering financial consultations, while also planning for the potential financial implications at your institution. On an individual customer scale, this might seem inconsequential. But if you forecast this pattern for dozens of customers, consider how significant the impact could be.

Data can also inform new parameters for terms with and acceptance of new customers. And it can help you stay in tune with customer needs as they change, so you can better meet them and remain competitive. Furthermore, you can apply operational analytics to improve internal efficiencies, contain costs and run strong through future disruption and change.

Leveraging data analytics can help you maximize opportunities and reduce risk at your financial institution. What does it mean to be truly data-driven? And how do you get started?

4. Emphasis on Empathy

Moving forward, any financial institutions’ claims that they’re “customer-centric” will be tested more rigorously than ever before. There is now a demand for greater sincerity and empathy in even the most rigid arenas. Financial institutions play a critical role in individuals’ lives, and they need to focus on empathetic initiatives and position themselves as support systems.

Leaders within your financial institution should be meeting to consider the following questions:

  • What tools do we have in place to better understand our customers’ needs and how can we improve them?
  • Are we equipping our employees to communicate with customers who are under duress?
  • Can we modify our terms and policies to accommodate new challenges our customers face, such as with collections and fees?
  • What materials, support and consulting can we provide to help our customers successfully manage their finances and understand their options, even in uncertainty?
  • How can we reframe our marketing to meet customers’ needs and deliver those materials?
  • Can we proactively identify customers who are at risk and perform outreach to assist them?
  • Are there opportunities for us to support and lift our communities, as in donating or participating in community initiatives?
  • How do we want to be perceived moving forward, and how will we deliver that message?

5. Receptiveness to Massive Change

For most financial institutions, economic and social disruption due to the pandemic and other factors have left no corner of their businesses untouched. This disruption has necessitated substantial, transformative changes in order to sustain operations. Scenario planning, data analytics, new technology and the need for empathy all factor into this massive evolution. Beyond these, you have to modify how you operate locations, ATMs, internal systems, employee relationships and contracts, customer communications and internal and customer-facing digital capabilities.

In the long-term, customer expectations will continue to change. Financial institutions must innovate to meet those expectations and to remain competitive. Is your financial institution having these discussions around massive change? If you want to gain customers’ trust moving into the future, you must plan to meet their changing demands and get proactive about being a source of support and understanding.

Navigating such massive changes in the financial sector can be challenging no matter the size of your organization. Consulting with experts in your industry means you’ll benefit from their wealth of relevant knowledge around what’s happening today, what’s working for other institutions and what will work best for you.

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