For the last several years, financial institutions have set their sights on innovation, technology and digital transformation – all as a means to make operations more cost-efficient and customer experiences more enhanced. The COVID-19 pandemic has suddenly turned such aspirations into necessities, with cost-savings, operational agility and business continuity more important than ever. In fact, a survey of finance leaders in banking and capital markets found that financial impact – including effects on results of operations, liquidity and capital resources – was their top concern with respect to COVID-19.
Strategic sourcing has always held a potent role in helping banks execute against their business objectives and ambitions. But COVID-19 has shed a new light on just how critical that role can be when activated to the fullest, especially in the face of uncertainty. Foundationally supported by the latest technologies, today’s Procurement and Sourcing teams are proving essential in supporting financial institutions as they navigate the pandemic’s disruptions and the economic crisis left in their wake. Leveraging collaborative software solutions, these teams are helping inform key decision-making for company leadership – using insights into company spend, supplier relationships and more to guide the enterprise to stability during tumultuous times.
As the banking industry takes on a world reshaped by COVID-19, companies must be extraordinarily effective in maintaining business continuity, cutting costs and reworking supplier relationships to survive and thrive – and strategic sourcing is powerfully aiding these efforts every step of the way.
Strategic Sourcing Supports Business Continuity
In advising banks on how to support and protect their workforces after COVID-19, McKinsey & Co. recommend prioritizing employee well-being – as well as introducing agile ways of working that will last beyond the crisis. Such measures are key to maintaining business continuity both in the near-term and in response to future disruptions, and Procurement and Sourcing teams have proven effective in supporting them.
As banks continue to cultivate a new normal for employees in place of physical offices and branches, they must identify the products and services necessary for supporting work-from-home models – and make digital adoption seamless for their workforce. Tech-enabled strategic sourcing is answering this call, helping banks identify and source solutions for video conferencing, voice and chat communications, IT infrastructure support, enhanced cybersecurity measures and much more. PwC recommends banks evolve their internal operations by increasing the use of intelligent automation tools to automate routine work, as part of a broader approach to maintain business continuity and recalibrate for the future.
As their staff adapt to new, virtual formats for internal and customer interactions, banks are relying on Procurement teams to help them uphold – and in some cases, raise – the standards of transparency, accountability and security for their organization. This remains important as it relates to employees and the enterprise as a whole, given the compliance requirements financial institutions must continue to meet. Empowered by the latest technologies, Procurement staff are helping banks drive these efforts while ensuring the remote workforce is properly equipped to collaborate and support business continuity plans. Additionally, with businesses gradually reopening across the country, a bank’s search for reliable cleaning supplies and services can be streamlined in the hands of Procurement, who can identify and connect with the right suppliers. Strategic sourcing’s full visibility into company spend data also allows teams to reconcile the associated costs of new pandemic-related measures in a way that adheres to organizational priorities.
Cost-Cutting Can Be Guided by Strategic Sourcing
Cutting costs has and continues to be a top priority for banks working through the negative economic impacts of the COVID-19 pandemic. An automated procurement function with a rapid-sourcing process can be valuable in this regard – something PwC recommends as a way for banks to trim costs quickly. Strategic sourcing supported by real-time automation-based Procurement solutions can help preserve cash, working closely with a bank’s Finance organization to cut back on organizational expenses that don’t support core capabilities that matter most.
According to Accenture, reviewing project expenditures and being flexible with vendors and suppliers are among the key ways for banks to respond to the demands created by COVID-19. Procurement teams working with advanced collaboration tools can help a financial institution manage spend in a way that focuses on core business processes, delineates priority spend from uncritical spend and establishes robust tracking. Using its full visibility into contracts, suppliers, projects and spending, strategic sourcing can help identify and put all non-essential spending on hold, capitalize on contract renegotiations and competitive bidding to secure new cost-reductions, and target areas across the business where consolidating certain vendor relationships may yield greater savings.
Relying on Procurement teams’ holistic and detailed view into where and how an organization spends its money, banks can enhance their cost-cutting efforts, allowing strategy to influence decision-making as opposed to dollar amounts. Furthermore, companies that prioritize strategic sourcing also enjoy the advantages of improved cash and working-capital – benefits that make a significant difference during a time when bank revenues have been disrupted.
Strategic Sourcing Aligns Supplier Engagement with Organizational Goals
Unlike many other industries, banking hasn’t experienced debilitating supply chain disruptions fueled by the pandemic, given its lack of reliance on a physical supply chain. Still, financial institutions are not without risk – with nearly a quarter of finance leaders citing supply chain disruptions among their top concerns with respect to COVID-19.
Banks are largely supported by a range of services from a network of vendors and suppliers, including professional services, IT, facilities management and more. Those with strong, tech-enabled strategic sourcing teams are able to overcome the challenges that come with analyzing and keeping tabs on spend on services, which can be more complicated than spend on goods and potentially more difficult during a pandemic. Procurement can also take things a step further and help optimize these relationships to better serve business objectives, using its insights into the supplier base to better collaborate with service providers and establish mutually beneficial pricing agreements.
The insights and agility afforded by strategic sourcing can yield business impact in both the short- and long-term, with banks able to rely on Procurement’s guidance and support as they rethink their business models in the post COVID-19 world. As companies reassess their products, services, customer channels, physical operations and much more to optimize their business for the new normal, Procurement and Sourcing teams can help recast its supplier network and service providers to support evolving strategy.
Strategic sourcing, backed by powerful software solutions, has long been a bona fide means to empowering any enterprise. Its advantages carry even greater weight in the banking industry, where transparency, accountability and collaboration are more than just pathways to business success – they are core virtues fundamental to complying with regulatory requirements and building customer trust. For financial institutions, Procurement may have emerged as a critical lifeline in taking on a crisis of COVID-19’s scale – but months later, the experience has also revealed it to be a necessary pillar of organizational strategy as ‘business as usual’ gets reimagined in the years ahead. With strategic sourcing having a seat at the table, banks can face tomorrow’s uncertainties with greater confidence and resolve.
Stan Garber is Co-Founder and VP at Scout RFP, a Workday companyand leading cloud-based platform for strategic sourcing and supplier engagement. Previously, he co-founded ONOSYS, a restaurant technology platform, where he led the business development and financial functions.