The coronavirus pandemic has stalled nearly all economic activities across the world. While the uncertainty still lingers about economic recovery from the coronavirus led fallout, the banking industry has a unique opportunity to prove their resilience and win support from a wider customer base, says Eyal Nachum of Bruc Bond.
During these crisis times, banks are working in conjunction with governments to provide cushion to the economy negatively affected by the pandemic. Businesses play a major role in maintaining the flow of the economy. However, supply chain disruptions, unavailability of the labor force and lack of funding have made it difficult for businesses to survive. Considering the scenario, banks have taken additional financial liquidity relief measures to prevent businesses from collapsing. For example, the Singapore Monetary Authority (MAS) has announced that it would allow banks to be more flexible in terms of regulatory requirements so that financial institutions (FIs) can take further steps to support businesses during this unprecedented crisis. Thus, banks play a significant role in the proper functioning of the economy.
Disruption: A Blessing in Disguise
The current disruption has created a new challenge for the banking industry. Due to the crisis most of the workforce is working remotely and so does their customers. Most banks are working for limited hours and at a reduced capacity. But due to social distancing, absence of physical banking facilities may alter customers’ digital behaviour. Thus banks are facing pressure to satisfy customer needs by relying solely on the technology. Meanwhile, near-zero interest rates, rising non-performing assets and credit losses have declined banks’ income. In spite of that, so far banks have succeeded in delivering up to their expectations. But the disruption has underlined the necessity for them to reassess and re-strategise their operations.
It is still uncertain how faster economies would recover and whether consumers’ digital behaviour would stick around for the long term. But it has become apparent now that banks need to up their game through their digital services. Excellent digital customer experience would differentiate banks from their fellow competitors, as more and more customers opt for digital transactions in the wake of a pandemic, says Eyal Nachum of Bruc Bond.
It would also help banks in gaining more customers as well as retaining existing ones. It is more likely that this disruption would fuel widespread reforms in digital banking facilities and customer onboarding. Banks now have recognized a need to simplify online banking transactions and make it easier for consumers to become part of the banking infrastructure. Apart from gaining and retaining customers, banks would require to increase customer engagement. Additionally, banks need to safeguard their remote working networks against any security threats or cyber-attacks. Also, financial institutions will need to develop efficient systems to deal with any such threat, if appears.
Thus for banks, financial resilience would mean the intersection of all these aspects, whether operational, technological or financial.
Eyal Nachum says the banking industry has to adapt itself according to customer choices, preferences and demands, in order to sustain changes.