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The ‘Real’ Situation the Banks are Faced with Amid the Covid Crisis

Banks throughout the world are faced with a financial predicament in light of the novel Coronavirus pandemic. It’s impact so catastrophic that once financially impregnable businesses now are on the verge of retrenching staff, resorting to remuneration cuts, borrowing loans, slow or desperately implemented revised strategic plans to increase sales etc. This imposes a heavy toll on banks as customers and businesses influx into their outlets seeking financial relief. In countries such as the U.S., banks are encouraged to aid customers as per their federal bank regulations.

In addition to bearing the burden of managing the economic impact of the pandemic, banks and financial institutions have to resort to a stringent strategic approach in order to protect its customers and employees. Many banks such as Australia’s Commonwealth Bank have implemented a remote working strategy since May of last year “I live in Bowral 100+ km away from Sydney with a 2.5-hour commute door to door. If I did daily travel it would add 25 hours to my work week, so I work from home as well as on the afternoon train. I’m at home 2 days, and when I’m in the office I leave at around 3.30pm and finish my work on the commute. If I couldn’t do this I don’t think I could still be working here!” Says Michael White, Head of Investment Exposure Management at Commonwealth Bank. An imperative and forward-thinking move, which may save them a lot trouble.

Allie Caracasidis, Operations Manager of Commonwealth Bank feels she has more time to balance between work and her personal life “I job share and work Monday and Friday. It means I have a great work-life balance – I’m currently studying part-time and completing horsemanship. I have a chance to spend time with my family and friends, rejuvenate myself and improve myself.”

With current social distancing & lockdown regulations, customers would need to find a means of conducting their banking needs without physical interaction. Almost all banks in the world now adopt a digitized banking and remote customer transactions, however, despite ‘digital’ being the way forward it may cause a massive hindrance and inconvenience to older and senile customers who’d most likely be unfamiliar with the digital process.

Challenging the Current Banking Procedure

As community spread of the coronavirus (COVID-19) proliferates, alternatives to in-person banking and physical exchanges are looking more and more attractive.

The World Health Organization (WHO) has dissuaded against the use of banknotes and physical interaction during this period. WHO, the pioneering global health organization has encouraged people to use digital means of conducting their business, as physical currency such as banknotes may harbour or contain the virus up to several days upon exposure.

The Bank of Korea was reported to have implemented a quarantine procedure with regard bills from local banks, isolating them for up to weeks. Whereas in China, where the virus originated, bills and banknotes are being physically disinfected, while in certain cases they are kept under quarantine. The American Federal Reserve, on the other hand, has instituted a practice to isolate banknotes from Asia for up to ten days.

Of course, it’s not just paper money that’s increasingly being viewed and treated as a potential Coronavirus carrier. Banks, consumers, and governments are weighing the risks of in-person banking, and opting for digital channels when they have the choice.

The Centres for Disease Control and Prevention throughout the world have advised people to remain at least six feet away from those who seem visibly sick. This may be a challenge at physical branches where many stand in line and one sneeze may infect the entire group of people around them at risk. Another reason according to medical practitioners to refrain from physical interaction is the concern over air circulation through air conditioners.

According to the WHO people who are inadvertently infected may turn out to be sick despite symptoms not propping up and in cases such as these they most likely may be considered carriers of the disease. Due to these conditions’ banks have adviced elderly customers to refrain from entering their branches as they are considered the most susceptible.

As the total number of cases inclined across the world physical banking will look less appealing for everyone, not just the most vulnerable populations.

Digital banking fueled through fear of Covid

Government organizations and banks are anticipating this shift towards the ‘digital approach’ whether it would be a success or not we’d find out in time to come.

The Federal Financial Institutions Examination Council of the U.S has ordered its banks to test their online systems’ capacity to handle an influx of digital banking demands. The agency called for “increased reliance on online banking, telephone banking, and call centre services” in addition to remote working.

Goldman Sachs, the famed investment bank and financial services company behind the ‘Apple Card’ have started off trading online from home, whereas, HSBC has implemented a Split-Site arrangement in Asia.

DBS Bank of Singapore gives insights into what branchless banking could seem like in reality. The bank was one of the first to resort to remote work when one of its employees was diagnosed with the virus. The bank subsequently was compelled to go into lockdown, which resulted in a robust digital banking system.

The bank has digitized 11 financing processes to reduce the need for in-person exchanges, is currently offering business accounts instant interbank fund transfers. The bank is also running webinars to train its staff on how to use digital tools.

In addition, SMEs can apply online for a short-term loan of up to S$50,000 to soften the blow of reduced sales and cash flow.

Despite the growing concerns ‘digital banking services’ are nothing new, particularly continental countries. Consumers seem to have grown a preference for online services but one thing that the ‘digital services’ component haven’t been able to address is digital outbreaks and disruptions, which customers still oddly enough encounter frequently.

A recent ‘Lightico’ survey records a customer complaint rate of 56% where they claim they were redirected from online banking interactions to physical locations. 48% who were slightly dissatisfied with the service say they’ve been asked to print, sign, and email papers while banking online.

Digital giants such as Amazon, eBay and Netflix have primed consumers to complete all online interactions in all areas of their life, including banking. The Coronavirus has just served to intensify people’s desire for digital services, turning it into a matter of urgency.

Alleviate banking customers’ fears with digital-only transactions

What we need to realize is that banks are a business and they as any other business organization are committed to preserving their profit margins, continuing business as usual. Reassuring anxious customers would benefit them significantly from using a digital front-end platform.

Lightico’s solution for banking enables bank agents to easily send clients a text message link, allowing them to complete forms, submit documents, upload ID, and sign via eSignature entirely through their mobile device.

While at the same time bank agents should provide real-time guidance by phone, helping customers accurately complete the entire process.

A potential stress-inducing visit to the bank may soon seem a thing of the past with the technology and service improving.

Even after the Coronavirus passes, digital solutions for banks will have enduring relevance. The growing popularity of neobanks and fintechs are a testament to that. Traditional banks that choose to learn and take lessons from digital financial institutions will find themselves more prepared to compete with challenger banks both during the Coronavirus pandemic and long after it’s over.

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