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Banking in times of corona


By Prateek Roongta

The new decade has started in a turbulent tone for humanity. The impact of Covid-19 is unprecedented. While healthcare, airlines, hospitality and retail experience the immediate effect, banking is no exception. Despite the large-scale digitization of the past decade, banks’ business models are largely dependent on human interaction. Banks need to quickly re-orient their business models and take measures for worker safety and business continuity.

While banks in India have launched a series of actions in response to Covid-19, such as establishing a central task force, limiting travel, canceling events and reducing outbound sales teams, given the pace of the situation, this is may not be the case. Here are a few suggestions:

Design “remote banking” model: Branches with low visitor numbers or close to others should be closed temporarily. Others may stay open on other days or for shorter hours. Under “remote banking”, changes have been made to the branch layout.

Keep employee safety and communication central: define and enforce policies that limit physical presence. Careful attention to basic hygiene with a thorough cleaning of buildings and the availability of disinfectants is of fundamental importance.

Focus on ‘smart’ working: innovate and experiment to discover ‘new ways of working’ and customer involvement. While demonetization made digital currency ubiquitous, Covid-19 was able to turn “virtual RMs” into a household trait. Ensuring the appearance of a normal working day with remote teams in the “new” working model is critical: discuss detailed schedules, weekly agendas and regular evaluations.

Business Continuity Plan: Divide employees into “rosters” and allocate working days and hours. Provide minimal overlap of office space between “grids” and plan contact tracing if necessary. Separate the basic activities from offices and employees.

A new look at credit policy: think proactively about changes in credit policy and don’t react afterwards. This could include postponement of payment, an increase in the term of the loans, interest payments, remission of criminal costs and interest for late payment. The lack of pre-agreed policies can lead to a shocking response.

Digital capabilities a must-have: customers migrate to digital platforms. Simplify onboarding on the internet and mobile banking apps, give online or telephone tutorials and improve digital channels to fill any gaps. Spikes in the use of digital channels require scenario planning to ensure that systems remain online despite high online traffic.

Lead with innovation: Offer innovative products that are relevant to customers in the current context. Health insurance to cover Covid-19 related quarantine or hospitalization, new loan products for the self-employed and SMEs with low collateral and fast processing.

Strengthening cyber security: Banks need to review their security infrastructure, taking into account the type of networks employees will open (public or private) and build systems for secure login from remote locations to ensure endpoint security.

Maintain financial discipline: Banks will have to pursue cost savings due to the impending recession and decreasing consumer demand. This requires rigorous and prudent expense management processes, rethinking non-critical capital expenditures, and rationalizing discretionary G&A expenses, eg marketing channels / expenses, training costs, etc.

Rather than reducing the workforce, banks should consider restructuring compensation to minimize the impact on profitability and postpone recruitment plans until the situation stabilizes.

In these times, banks must focus on the well-being and safety of workers, while keeping the lights on to ensure preparedness for recovery and recovery. A resilient and robust banking network will give our economy the much needed strength to overcome this crisis.

The author is general manager and partner, Boston Consulting Group, India. Views are personal.

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