Covid -19 in Financial and Insurance Services

Security Services

  • According to verified market research, the Global Physical Security Market was valued at USD 85.58 billion in 2017 and is projected to reach USD 184.01 billion by 2025.

Market Watch, May 2020

UK

Rollo Davies Predictions, a frontline Security Expert and Managing Editor of The Professional Security Officer Magazine (TPSO):

Although there are fewer guarding opportunities in the entertainment industry, there are new opportunities in other sectors like supermarkets, and frontline security officers are needed to supervise social distancing at a number of locations. Post COVID-19, I think we will have to increase training for our officers. There are professional security officers who want to do their job, but there are also officers who got on-the-job training and who took the job because they perceived it to be an easy job.

I think the use of CCTVs will increase, and all of these changes will put pressure on the guarding industry. I foresee a need for improvements in the manned guarding industry, but that need is primarily for more training and education.”

Tracktik, April 2020

Call Centres

Increased Demand

As per The Times UK, April 2020,

One industry that looks certain to benefit is call centres. Customers who have spent hours on hold in recent weeks will know that unprecedented call volumes have swamped many centres. After this spike decreases, there is likely to be a permanent increase in demand that could help to stem, or even reverse, recent job losses in this key part of the economy.

Operational Challenges

As per Call Centre Helper, March 2020,

  • The most obvious challenge is how to continue operations when staff are office-based. Other problems include reduced staffing levels and the knock-on effect on the service delivered to the end customer.
  • There will inevitably be increased pressure on day-to-day operations, as there may be increased call volumes, and with less staff to service the calls, there will be increased waiting times, leading to increased customer dissatisfaction.

Highlights

 

  • Over 70% of banks anticipate greater demand for creativity and emotional intelligence in response to the digitisation and new technologies (PWC UK, 2021).
  • Investment and Management segment noted a 72% increase in employment levels in Q3 of 2021 compared to the previous quarter (PWC UK, 2021).
  • Private equity investment in the UK has risen to its highest level in five years, according to KPMG (Private Equity Wire UK, 2021).

Key Developments

  • Banking: Optimistic but cautious

Optimism, volumes and returns remain strong, and the outlook for the 4th quarter of 2021 continues to be positive. The anticipated fall in NPL rates is especially encouraging, underlining banks’ confidence in the economic recovery and the resilience of their customers.

But PWC’s UK (2021) survey also highlights challenges ahead. These include the tightening of spreads, which reflects intense competition in key markets such as mortgages and the need to control costs to sustain returns. While headcount is down in the sector, competition for expertise in areas such as ESG continues to mount.

As more operations are automated, many banks believe that the real differentiator will be human capabilities that machines cannot replicate. Over 70% anticipate greater demand for creativity and emotional intelligence in response to digitisation and new technologies (PWC UK, 2021).

Image source (PWC UK, 2021)

 

  • Insurance: Technology Modernisation, Shift in customer demands and IFRS 17

Insurers’ confidence about rises in business volumes and returns in the period ahead is the strongest of the other FS sectors. Significant investment in new technology is paying off in terms of improved agility and cost-efficiency. Nearly 40% of insurers are now realising the benefits from their investment. The nimble, digitally-enabled front rank has opened up a significant lead over a trailing pack that is still at the planning and transition stages.

At the same time, insurers recognise the challenges in sustaining this standout performance. In particular, they’re the most likely to point to the disruptive impact of regulation changes. Pressing developments range from the pricing review to IFRS 17.

As market developments in areas such as sensor tracking and pay-as-you-use insurance gather pace, the ability to move quickly in response to changing customer demands will be even more of a differentiator (PWC UK, 2021).

Image source(PWC UK, 2021)

  • Investment Management: Digital Transformation & ESG Agenda

Rises in business volumes and returns have flattened in Q3 following the substantial gains in the first half of 2021. However, investment managers expect both to pick up significantly during the fourth quarter.

The acceleration in digital transformation is reflected by the fact that more than 60% of investment managers in PWC’s UK survey have either implemented new technology systems across their business or moved on from there to realise the benefits.

ESG is at the forefront of the agenda. Accordingly, more than 70% cite embedding ESG within their business as a critical part of their transformation strategy. But investment managers report that progress continues to be held back by lack of data and appropriate systems. This creates a potential risk of failing to live up to promises on ESG and being called out for possible ‘greenwashing’ (PWC UK, 2021).

Image source (PWC UK, 2021)