The Pandemic Rocked the Financial World. What Next?

By Gunjan Goel, Partner, Financial Services and Banking – Prolifics

The effects of the pandemic on the US financial services industry were extreme and obvious: a shift in business models, a remote workforce, fast-changing operating models, and the need to speed up the digital transformation of systems. In this blog we’ll take a closer look at the effects on the capital markets space as well as the banking space.

A little context will be helpful, as the US capital market is a significant component of the global markets and therefore often sets the path for the rest of the world.

• As of 2020, per World Federation of Exchanges, the US equities market accounts for 40 percent of the $97 trillion of global equity market capitalization – 3.7 times more than the next largest market, China.
• US fixed income market accounts for 40 percent of the $106 trillion securities outstanding – 2 times the next largest market, the EU (excluding UK).

The pandemic made 2020 one of the most volatile years for the capital markets – the resiliency of the entire system was put to the test. In the US, several economic packages have been pumped into the market to help stabilize the volatility and generate other benefits. I expect changes in financial regulations to reinforce these actions and promote growth. Capital markets are rightly seen as one of the critical infrastructures of the country, becoming the launch pad for economic growth. The nation has to continue to grow its capital markets to support its economic growth – navigating through systemic challenges thrown its way. The continued focus on ESG (environmental, social and corporate governance) will only be compounded through ensuring operational resiliency.

When we look at the private wealth management sector, the pandemic pushed market behavior to go remote. The banks responded and two changes started shaping up. At the consumer level, there was a rise of retail investors with increased spending power that entered into wealth management. At the bank level, institutions offered expanded services to seamlessly work with increasing volumes of remote customers. The higher the market volatility, the greater the volume of transactions. With most of the economy in lockdown, customer spending power increased, resulting in increased investing.

At Prolifics we saw this coming and started working with our clients, advising them of the expected changes ahead, preparing them via programs and creating offerings to help in the journey, such as

• Helping clients more effectively utilize their data
• Bringing in artificial intelligence to customize the increasing volumes – garnering customer loyalty
• Becoming more agile and responding to the ever-changing market via micro-services, cloud services and others.

We believe that the banks that have taken this jump to embrace digital modernization and ballasting their infrastructures (while staying nimble) will come out ahead of the competition, realize more profits and enjoy a wider network of more loyal customers.

About the Author

Gunjan Goel is an innovator, change agent and leader, with expertise in process improvement, customer experience, analytics and security. He has been with Prolifics for 12 years and has more than 22 years of banking and financial services consulting experience for clients across North America, Europe, and India. Goel consistently identifies and executes transformational programs that help financial institutions stay ahead in our constantly changing business landscape. You can reach him at gunjan.goel@prolifics.com.