The unnatural selection

Reevaluation, or do you miss Brexit yet? 

We went into 2020 thinking that the biggest macroeconomic storms we were likely to see were events of a political nature. We’re all wishing Brexit was still our biggest inconvenience.  

A global health pandemic is a beast so primal that it’s taking us all a while to get used to the new reality of distributed isolation. When your business runs or is highly dependent on a persistent physical presence in the lives of your partners and customers, having lost that, how do you adapt to survive in this new reality and the chapter that will come after? 

We will inevitably regain confidence in tomorrow and return to the new normal. For now, with its undiscriminating cruelty, COVID-19 acts both as a litmus test and as a catalyst for the financial services industry and beyond.  

The impact of COVID-19 is not far off from the impact the arrival of the Internet had on the world. Barring the search engine monarchs going unchecked, it will democratize opportunities for companies to deliver the best they can at the lowest cost to the customer.  

As we are forced to do more with less, how will the new reality correct the industry’s course? 

Course correction 

Before the pandemic, there were two shots at customer acquisition and interaction: strong online and offline brand, and persistent presence. Online creativity and internal efficiency get you a prize in the virtual world, but a strong offline game requires capital – not simply an unaffordable luxury for many startups, but not even an option currently. With restrictions on engaging with your customers offline, it’s more critical than ever to effectively communicate your brand value and be able to deliver all your services online.  

The new normal will assume a premium as its new baseline.

The impact of this pandemic doesn’t stop there. It will also mercilessly shave off already razor-thin margins from revenue-generating online services and force businesses to deliver them free or near-free for a period, if not indefinitely. The new normal will assume a premium as its new baseline. Some of the most successful financial technology and e-commerce companies have already been operating under this model (for startups, often at the cost of profitability), but now everyone is entering the same competition to deliver more with less and for less.   

That leads us to a question: how will monetization models change? Where will businesses that are forced to deliver all their services online find opportunities to generate revenue, when their online-native competitors have already been doing it successfully for some time, and for free? Will this lead to forced cooperation, or even massive industry consolidation?  

And as you move to deliver and support your entire suite of services online, how do you adjust your infrastructure to be ready to meet the demands of your customers? The pool of customers who are forced to change their habits and need additional support will require you to develop the capacity to provide it. The new throughput demand will force the need for a more robust infrastructure and connectivity. It may also reshuffle priorities in the industry in favor of B2B2C providers, who will enable their customers to service fast-changing demands and more complex needs online with improved efficiency and experience. 

MSMEs are some of the most vulnerable victims of the situation and represent the market most in need of support. This pandemic is a unique opportunity to help MSMEs reach and engage with their customers, and with that, gain their trust and future business. 

But as our interactions with people and businesses move fully online, how do we ensure that an overwhelming flow of messages and transactions does not translate into fraud and security breaches for all parties involved? This may be the time to shine for technologies that enable secure and trustless online environments.  

The next chapter  

We have many questions and no definitive answers. As we look forward to turning this page, how can the financial services industry make sure it’s prepared for something as disruptive as COVID-19 in the future? 

Capabilities and initiatives that have been native to your competitors but up until now optional for you are now what will deliver them an unfair advantage and leave you out of the spotlight. Extreme interoperability and integrations with a wide range of partners are now a powerful proposition that sets a new standard.  

Where you have shied away from a revenue-share option with a partner in favor of a proprietary proposition, or where you have chosen few cost-efficient payment methods instead of an array of options, now is the time to course-correct and choose to share your revenue rather than lose it.  

We cannot predict the future. But if there is a silver lining, it’s that the changes you make to survive now will make you much better prepared for whatever comes next, from building a resilient tech support system, tools and software, to finding a more effective and secure way to share and collaborate internally and externally.