News

Digitalisation and the future of banking: Cloud solutions and outsourcing help save costs, says a partner at Deloitte Legal

For many years, we have been hearing about digitalisation changing the world. However, the coronavirus pandemic has accelerated this trend even further, and banking is one of the areas in which it has manifested itself the most. Providing online services has become a matter of life and death for many financial institutions practically overnight. What other effects will the digitalisation have in this field? And what other trends will affect the functioning of banks and their services? We talked about these and other topics with Jan Procházka, partner and attorney at Deloitte Legal, who focuses on banking and finance.

Thank you for agreeing to speak with me, Jan. First of all, could you tell me a little bit about yourself?

Well, I’ve been working here at Deloitte Legal for quite some time – 17 years, to be precise. Time flies, indeed! I started here as an Intern, and grew and developed my skills through various positions. So, I’ve seen the legal firm, Deloitte Legal, grow from some 20 people to over 100 nowadays. Despite the years here, I have to admit that I’m not the most senior person in the team there are several other colleagues who have been with the firm even longer than I have.

OK, and could you tell me about the Banking & Finance practice here at Deloitte Legal?

We are a practice focused on the regulation of financial institutions, which means that we don’t specifically do financing. In a regular law firm, Banking & Finance would usually mean financing, but for us it is the regulatory work this sets us apart a little, I believe. Regarding competitors on the market, in the regulatory sphere, we can see some boutique law firms covering this, but not many of the larger law firms go into detail in this niche area.

What differentiates our Banking & Finance team from others on the market?

Still, compared to the boutique law firms, I think that our competitive advantage is in two areas we offer the other service lines that can help (tax, financial advisory, consulting etc.), and then also, due to our larger headcount, we really do have industry experienced specialists. Not all boutiques have such experience in house, with colleagues who had worked in banks before coming to Deloitte.

What topics do you think will become relevant in Banking & Finance in the coming months and years?

Well, the first word that comes to mind is quite simply “Digitalization” although this is different across the industries, with the banks starting this Digitalization process even before the pandemic. This gives them more opportunities to leverage on that. Their clients just need to interact with the bank, online, and then the bank just has to take that step towards the client which has already made the first move. It’s interesting to see how this is done on the market, how traditional banks transform themselves into digital banks, and how new players, starting from zero, emerge fully formed with a new digitalized offering. For other players, however, taking the steps to Digitalization, such as for insurance companies, this can be more difficult to attract clients to their online environment.

Apart from Digitalization, are there any other emerging topics you can see in Banking & Finance?

The question of Cloud solutions and outsourcing allows for a new optimization, which is rare currently in the Czech Republic – although it will offer some significant cost savings. Finally, one last point, is that banks, which are not always the most dynamic of companies, are encountering workforce transformation using different models such as tribes and agile working. On the other hand, the idea that we would move everything to Digital and online, and close the physical branches entirely, is something that is fading.

In these challenging times, what difficulties do you anticipate seeing more often among your clients?

Of course, banks will be seeking other sources of income. Due to strong competition, their margins are likely to drop. There have been some experiments with cross sales, which I don’t think were very successful, such as selling electricity at bank branches. Now with Banking ID, we can see that banks, with their enormous client portfolio, that they can be the providers of online identities. This may well be more successful for them, but we will need to see if this works to draw in new income. Then, another topic is exploiting Big Data, of their clients, to use that for more accurate and successful cross selling and pitching of products to their clients.

That’s great, Jan! Very interesting, indeed! Thank you for your time.

John James McVeigh

jomcveigh@deloittece.com

Jan Procházka

jprochazka@deloittece.com