The fallout of Covid-19 has been heavy on financial service organizations across banking, insurance, and asset management. Through volatility and record levels of unemployment, organizations have been challenged to help their clients make sound financial decisions, while keeping their own businesses afloat. Much of the health of the economy depends on the health of financial services.
Looking ahead, it won’t be enough for organizations to simply weather the storm and hope for tailwinds in the coming months. The IMF forecasts increased contraction across the global economy through the end of the year. And, while the challenges of Covid-19 are immense, they are really just additional pressures mounted on what was already an increasingly competitive industry.
As a result, many financial service organizations have accelerated the digital transformation of procurement. With the help of intelligent digital solutions, they are building the operational resilience to bring employees back to the office safely and prepare for the workplace of the future.
Covid-19 accelerates digital transformation of procurement
The financial services landscape has transformed over the past few years. The rise of FinTech, changing customer expectations and increased competition have driven companies to streamline operations and innovate.
Covid-19 accelerated the need for change. Increased safety concerns, debt provisions, reduced consumer spending, high potential for fraud, and a low-interest environment shifted financial services’ focus to reducing costs to maintain continuity. This trend permeates all industries. According to Gartner, 62 percent of CFOs report that they are planning to make significant SG&A cuts this year.
The greatest catalyst for change came when, within a matter of days, most employees were sent to work from home. A virtual workforce now needed IT equipment, supplies, and furnishings shipped to their homes. Purchasing managers suddenly found that they had very limited visibility into, and control over, what employees were buying, as the use of purchasing cards at online retailers and physical stores increased. Their traditional purchasing systems—with limited selection, low visibility, and rigid shipping protocols—were not equipped to support a virtual workforce and help control costs.
Forward-thinking procurement leaders are leveraging the need to support a disparate workforce to modernize their procurement processes. By implementing digital purchasing solutions, they are getting control over indirect spend, increasing agility, and moving forward in the face of change.
Returning to the office, safely
Some financial service providers have already brought employees back to the office, and many are planning how to do so safely, causing leaders to rethink how procurement happens across the company. What needs to be redesigned to support shifts in needs and behavior? For example, personal protective equipment and safety display items in the quantities they need may not be available from the company’s existing suppliers. Creating a holistic, digital approach to tail spend now can help leaders not only source the equipment they need in the short term, but lower overall costs and achieve greater flexibility over the long term.
Tail spend—purchases that occur outside of contracted suppliers—can represent as much as 20 percent of an organization’s total spending. Many financial service providers are reducing costs and saving time by shifting all tail spend to an online store. Gartner predicts that 75 percent of all tail spend goods will be purchased in an online, multi-seller store like Amazon Business by 2022. When multiple suppliers are brought together in a single store, managers spend less time processing multiple contracts, approval paperwork, and invoices, and get time back to focus on more strategic activities.
Preparing for the future of work
“Once you learn that you can move all your users to work from home in days, rather than years, you start thinking about what else you thought was too hard to do,“ said Orion Hindawi, co-founder of cybersecurity company Tanium, Inc., in a recent interview by the Wall Street Journal. The article refers to a Gartner analysis that found nearly 70 percent of corporate boards surveyed cite the impact of Covid-19 for a ramp up in spending on IT and digital capabilities.
Though some companies have announced that employees will work from home permanently, for financial services, the long-term solution is more likely to be a hybrid of working onsite and working from home. Companies will have to rethink how their purchasing process can empower employees, wherever they are, and provide the security, visibility, and controls management needs.
Salesforce reports that 82 percent of business buyers want the same experience when they are buying for work as when they’re buying for themselves. Organizations that have moved purchasing to Amazon Business are giving their teams the familiar shopping experience of Amazon, with access to hundreds of millions of business products.
Rhonda Olivia, Executive Administrative Assistant at MIDFLORIDA Credit Union notes, “Adding Amazon Business as one of our suppliers has made ordering easier, faster, and more convenient for all involved. There’s a wide selection of items, along with online reviews to help. It’s basically a one-stop shop.”
Just as the new era of open banking has enabled technologies to quickly and seamlessly integrate, procurement systems are doing the same, causing paper processes to be replaced by networked digital systems. Purchasing managers can give employees access, and increase security within their existing e-procurement systems, by integrating with Amazon Business using punchout. Single sign-on (SSO) gives employees a centralized and secure way to access the business account using their existing corporate credentials.
Managers can maintain control over their time and budgets by streamlining processes with automation technology. Preferred product lists, purchasing thresholds, approval workflows, automated reordering, and guardrails to help maintain compliance can be built directly into the shopping experience—working together to increase the organization’s agility.
Technology is also enhancing visibility. Powerful, machine-learning analytics can analyze purchasing data to learn an organization’s buying patterns and provide insights. Powered by cloud-based Amazon Quicksight, Spend Visibility turns purchasing data into visualizations that managers can use to make budgeting decisions and optimize savings.
The digital transformation of procurement is helping financial services move beyond maintaining operations to turn procurement into a strategic value driver. Through machine-learning driven solutions, Amazon Business helps financial services meet changing customer and employee expectations and operate flexibly in the digital economy.