11:FS, the challenger firm defining and building truly digital financial services, today announced new research, how COVID-19 will reshape financial services to be digital by design.
Authored by 11:FS Director of Research Benjamin Ensor and Research Lead Sarah
Kocianski, it takes an in-depth look at the issues facing the financial services industry.
The research goes on to examine the medium-term effects of a recession and the
shift to digital across banking, investment management and insurance. It concludes
with the implications of the long term recovery and reinvention that will be required
in the wake of COVID-19, specifically:
● Mergers and acquisitions are inevitable. Faced with falling revenues and a
shortage of capital, weaker firms, particularly banks, will be forced into
mergers. Acquisitions will occur across financial services, including fintech
firms, with a mixture of purchasers including VC and private equity firms, as
well as well-capitalised big tech firms.
● Governments will have to bail out failing firms. The longer the crisis lasts, and
the more defaults pile up, the more likely it becomes that at least some banks
and insurers will risk becoming insolvent. At that point governments will have
little choice other than to bail out those firms or risk a systematic collapse of
the banking and insurance system.
● Digital partnerships will accelerate. As they strive to cut operational costs to
match their falling revenues, firms will look for partners that can provide
non-core services more efficiently than they can deliver those services
themselves. Expect to see rapid growth in the provision of capabilities like
anti-money laundering detection as a service.
● Automation and increased AI use means certain jobs will cease to exist. The
pandemic will accelerate changes in what people do as companies rapidly
digitise and automate in response to the pandemic. Machines will take on
more routine tasks, such as spotting fraud, while other tasks, such as check
processing, will be reduced or eliminated entirely by software. Some roles will
become obsolete. Administrative roles will be among the first to go.
● Leaner organisations will emerge. Although some banks like Lloyds in the UK
have suspended job cuts, in the long term job losses are inevitable as firms are
forced to cut their costs in line with lower revenues. Far fewer employees will
be needed in order-taking, clerical and administrative roles. But firms will need
to hire for newer roles like software developers, interaction designers and
● Many bank branches will never reopen. Countries such as Italy, Spain and the
United States, have far more branches than people really need. Many
branches that have been temporarily shuttered, will close permanently as
banks and customers realise they are not required for day-to-day banking.
● Firms will develop new digital distribution models. Marketplaces will play a
bigger role in product distribution as customers shift to digital channels.
Platform-based companies will gain share at the expense of other distributors.
“The COVID-19 pandemic has created an immediate operational crisis in financial
services firms that have ignored the digital imperative. They have been caught out by
the sudden switch to remote working, the mass closure of branches, contact centres
and agencies, and the fundamental flaws associated with paper-based
“While so much is still in a state of flux, there are trends already emerging that point to
how financial services firms must react. By demonstrating the advantages of being
digital by design, the crisis has created the impetus for the whole financial services
industry to embrace new ways of working and delivering services to customers.”
The full research can be viewed here.
Download the Full report below:11_FS How the COVID-19 pandemic will accelerate digital financial services
About 11:FS Digital financial services are only 1% finished – we’ve created the team for the next 99%. At 11:FS we’ve assembled the world’s top banking, fintech and insurance leaders to transform traditional banks from within, and build new banking services from scratch. We field interdisciplinary teams bringing the best designers, product experts, consultants, researchers, technologists and domain specialists together to deliver tangible outcomes in the shortest possible time frames. By combining corporate expertise with startup agility in the way we work, the way we think and the way we build propositions, we are uniquely placed to help overcome legacy systems, create new business models, and develop the best next-generation, customer-centric services.