Ready and resilient: Retail banking strategy for a COVID-19 world

As you prepare to operate your business in a post-pandemic environment, are you building based on what was, or what will be? In tomorrow’s world, old behavioral norms, macroeconomic assumptions and client expectations will likely no longer apply.

Even before COVID-19 hit, banking leaders were facing deep structural issues. Revenue growth over the past decade has been uninspiring. Banks face the prospects of an extremely difficult recovery, and they’re looking for a more sustainable, resilient path.

Your stakeholders are open to change, so you have a rare opportunity to put more options on the table. As you use this moment to redesign your bank for the future, make these your top four priorities:

  1. Reconfigure your operating model
  2. Rebuild your revenue growth engine
  3. Redesign your risk management
  4. Reinforce your purpose, culture and talent

1. Reconfigure your operating model

For banks, it’s time to do the work to digitize end-to-end processes: not “by the end of the decade,” but now. This is one of the biggest opportunities in front of banks today.

- Ashish Jain, Principal, PwC US

Working on the right things

For better or worse, a crisis focuses our attention. So many nonstrategic and nonessential activities are already dormant. Don’t restart them. Instead, use a zero-based budgeting process to reassess your 2020 plan so those costs and distractions stay cut.

As you prioritize your spending, you may be tempted to make some snap decisions. For example, you may be told, “Let’s cut marketing. It’s discretionary and in our control.” But topline growth is strongly tied to marketing spend, and cutting indiscriminately could cede ground to competitors. Are you proposing cuts to a marketing analytics program that lets you see customer preferences at a detailed level, or a sponsorship with an ambiguous ROI?

Working on things the right way

It’s amazing that banks were able to disburse billions of dollars in stimulus funds with only a few days to prepare. But for many, the struggle to modify existing systems resulted in a lot of manual work to process the loans. The pandemic also revealed some shortcomings of past automation programs, in which banks deployed robotic process automation (RPA) as a point solution without looking at the bigger picture.

We recommend taking an end-to-end view of processes—from the client’s initial data input to closing, or from a customer’s initial request, to servicing their product, to closing the request with resolution. This approach requires investment, and it also might require reallocating some of the technology budget from front-office digital tools to infrastructure for back-office operations. When this is done right, the payoff can be achieved in as little as 12 months, and the outcome may include an operations platform that can scale up or down quickly.

Balancing operational resiliency and sourcing efficiency

There’s an inherent trade-off between operating simplicity and redundancy. Some banks are discovering they’ve added too much risk by concentrating their vendor programs too aggressively. But dialing supplier concentration up or down to prepare for life after the pandemic is only part of the story.

We expect to see a shift in thinking, in which banks will likely look to digitize and streamline their scale processes before even thinking about outsourcing. Whether you keep work in-house, turn it over to external vendors or take a hybrid approach, digitizing your processes may let you incorporate remote working as needed. For many, that means including the workflow technology, collaboration tools and new sourcing risk management capabilities that are currently absent in many organizations.

Going forward, we expect to see many banks diversify their sourcing strategies and move toward a multi-vendor, multi-location norm.

Providing smarter customer service

The pandemic highlighted the need to reimagine customer interactions. Some banks quickly innovated by using excess staff in branches to take calls and service customers, but that highlighted issues with training, access and inflexible processes, to name but a few.

Leading organizations now look to build a high-tech, high-touch customer servicing model that enables virtual work from home when needed, and over 90% of which involves non-human interaction. Making the new model work will require cloud-based infrastructure, supported by artificial intelligence (AI) and natural language processing (NLP) technologies, to quickly assess a client’s need and solve it as efficiently as possible. When done well, the new models can provide banks with better customer service, more flexibility for workers and cost efficiencies.

2. Rebuild your revenue growth engine

The current crisis could condense years of additional branch network consolidation plans into a few months. As one CEO said, “Nobody expects that all of these branches will reopen at the end of the crisis.”

Before any focus on growth, we suggest segmenting your customer set to understand how their financial needs have changed and how the crisis may have altered their behaviors. Conduct research sprints that you can translate into integrated propositions and rapid prototype testing with risk, finance and compliance partners. The results could shape the products you sell, the way you promote them and your distribution model.

Financial products and services

At the center of today’s product design approach is a relatively distressed client balance sheet. With changes to personal savings, reliance on debt and the ways in which users access the banking system, product preferences will likely change. Some effects are pretty clear. Users of certain credit cards, for example, will probably place less value on travel rewards linkages, and that could lead banks to redesign their payment propositions.

Regulators have turned to the banking sector to provide more credit, as shown by the Paycheck Protection Program (PPP) and Main Street Lending Program. Some credit product lines—such as home equity lines of credit and other home equity offerings, securities-based lending and unsecured lending—may become significant growth opportunities over the medium to long term.


Retail banking customers, especially younger ones, increasingly consider transactional services, such as real-time payments and cards, as their primary account, not a deposit account. The COVID-19 crisis may only accelerate this trend for all demographics.

Rather than fighting these forces, you may want to take advantage of them, especially since the cost of organic customer acquisition has typically been so high. As an example, banks can make far better use of affinity marketing partnerships. Your brand may have powerful positive associations, but some high-value customers may trust a co-branded entity even more. By creating timely offers that align with a customer’s specific needs and a common bond, you may increase your bank’s relevance and ranking in your customer’s eyes.


In the COVID-19 crisis, most retail banks made changes to branch distribution and client service operations. The number of US bank branches had already been shrinking at a net rate of 1 to 2% per year, and the current crisis could condense years of additional branch network consolidation plans into a few months. As one CEO said, “Nobody expects that all of these branches will reopen at the end of the crisis.”

Branches remain the industry’s largest operating cost item, even before considering the new costs for facility cleaning and additional health safety measures. The catch is that, with few exceptions, banks of all sizes still count heavily on branches to anchor their new customer acquisition strategy and product sales. Retention could also become an issue. Bank customers are usually loyal to their primary bank, except when facing major life events like job changes, moves and personal relationship changes: changes we might expect from the pandemic.

So how can banks make digital acquisition work more effectively? Start by raising your expectations. Digital channels have been a great driver of service, but until recently, they’ve been an afterthought for attracting business at most banks. Now it’s time to use them to find the high-value customers your bank needs.

To do that, you’ll need to understand the drivers that matter on an individual level. Digital-only channels are now mature enough for banks to understand the variables beyond deposit rate—such as product type, convenience and brand—that can improve deposit quality. For some, the driver may be service quality. For others (even customers who are price-insensitive in other areas), it may be promotional pricing.

Instead of trying to create a virtual copy of the branch network you and your customers have known for years, ask: What new opportunities does digital-only distribution offer that we can’t access in our current model?

3. Redesign risk management

Managing customers through the recession

As we emerge from the immediate crisis, bankers will need to evaluate more combinations of risk than they’ve seen before. How banks respond to customers could be pivotal in determining how their brand is perceived for years to come.

Banks should use their data to identify which customers are better-positioned to ride out the crisis, and which will need more active management and outreach. Then they should tailor their efforts based on those characteristics. For example, you might reach out to customers facing temporary financial strain with customized solutions such as interest deferrals, new credit lines and fee waivers. You’ll want to use a clear set of objective criteria to drive fairness and avoid any perception of discriminatory behavior. Where possible, focus on preserving client relationships over near-term revenues.

Update credit and risk models

In the wake of the pandemic, there’s an even greater need for flexible data tools. Banks will likely expand the way they evaluate credit risk, potentially leaving them and their customers better off as a result. Banks can learn lessons from FinTechs, some of which can independently verify borrower information, help meet know-your-customer and anti-money laundering requirements and access payroll records.

There are opportunities to improve credit risk models to include real-time tracking of attributes and more sophisticated segmentation to help manage risk by household, industry and geographic vulnerability. Some banks may even want to layer in other criteria by population segment—in this case, COVID-19 data.

During the pandemic and beyond, it makes sense to have targeted treatments for different client segments—again, using objective criteria, with appropriate input from legal and compliance teams. Consider using a centralized team, as the relevant client relationships could span multiple business units. Without such a team, it may not be clear who has ultimate responsibility: the risk organization, the product P&L owner(s), an operations group or some other unit.

Redesign risk, compliance and controls

Most bankers have known for a while that their risk management tools weren’t nimble enough to adapt to overnight changes in circumstances. We recommend digitizing processes and creating monitoring dashboards—but we also explicitly recommend against treating this as merely a technology exercise, as the tools themselves are secondary.

Now, as you prepare to emerge from the crisis, start with the fundamentals:

  • Get your team ready. Give your team incentives to balance performance and risk taking, and to generate ideas about how to extend digitization within risk management and compliance routines. Invest in digital, technology and analytical skills training.
  • Enhance the operating model. Your product and process owners may not have the ability to manage and be accountable for risk. Give them the tools they need, along with access to the right information, by building integrated teams. You may discover duplicate efforts which can help you streamline further.
  • Focus on process. Before you automate your controls, you’ll need someone to integrate taxonomies, control libraries, risk and regulatory inventories and data structures. You should have your controls designed for the big picture—one that’s based on end-to-end views and objectives.

With an end-to-end view of risk processes, you should have more accountability and better decision-making. You’ll also be more likely to see savings from reducing duplicative activity, eliminating manual testing efforts and limiting errors that must be researched and corrected.

4. Reinforce your purpose, culture and talent

With all the urgent priorities right now, your team may not put “purpose” high on the list. But emphasizing your organization’s purpose may be one of the best ways to rally the team for the hard work ahead.

Your culture rose to the occasion. Keep it going

As tough as the crisis has been, employees have risen to the occasion at many banks, demonstrating the behaviors CEOs and CHROs hope for, but don’t always see. Employees broke down silos and took initiative, ownership and accountability. And they made and executed decisions quickly.

Distill the root causes behind these elusive behaviors and why they occurred so widely and organically during the crisis. Then take steps to make these behaviors stick, help managers continue to reinforce them and update processes that can help sustain them.

It’s also essential to articulate how your organization’s purpose, mission and values connect to business outcomes, and how they can help society at large by achieving those outcomes. When the effort is genuine, it can help your employees recommit to the organization by understanding its higher purpose.


“New ways of working” means more than “working from home”

Along with getting employees back to the workplace safely, some banks are considering a permanent hybrid working-from-home (WFH) model, with most employees working from home at least some of the time.

Remote work has implications for teaming, technology and tools and productivity. Be sure to implement collaboration tools that fit your culture, so you can help employees work as effectively as they did before the crisis—or even more so. You’ll also want to find ways to foster a sense of community in a remote working model across all of your facilities, and you’ll want to help your managers learn a new style of leadership. None of this will happen by chance. You will need to intentionally redefine the way you work.


Update talent models and processes

The bank of the future will likely need workers with different skills, and that could require new approaches to recruiting, training and retention. The number of full-time employees will likely decline, as companies across the board try to make workforce planning more agile. The share of “contingent workers”, managed services and outsourcing arrangements will also likely increase. And more employees may opt for part-time work as they seek flexibility.

Talent acquisition will likely move toward virtual interviews and onboarding programs. That could be followed by changes to your learning and development processes. Remote work means that measuring productivity and managing performance will likely change as well. In this environment, managers will need to shift toward managing for outcomes rather than by face-time in the office.

Leaders need to reenvision the way they acquire and manage labor—not just to get work done, but to create a workforce that is more fulfilled, more effective and more resilient than the teams they have today.


Contact us

Ashish Jain

Principal, Strategy&, PwC US

Sanchit Tiwari

Partner, Strategy&, PwC US

Arjun Saxena

Principal, Financial Services, Strategy&, PwC US

Dr. Deniz Caglar

Principal, Strategy&, Strategy& US

Follow us

Required fields are marked with an asterisk(*)

By submitting your email address, you acknowledge that you have read the Privacy Statement and that you consent to our processing data in accordance with the Privacy Statement (including international transfers). If you change your mind at any time about wishing to receive the information from us, you can send us an email message using the Contact Us page.