From crisis to opportunity Even though the Corona crisis brings along huge challenges, it also offers the opportunity for banks to act in accordance with their purpose and take a societal role. This way, lost confidence of clients can be regained. And in addition, client loyalty can be increased by truly listening to clients’ needs and concerns. By combining fast decision making and execution power, banks can – especially now – differentiate and position themselves as the partner in good and in bad times. The question remains: how?
Banks take responsibility The Corona virus has impacted the Dutch economy enormously within a short period of time. Big events are being cancelled, ‘social distancing’ is already the word of the year and both small, medium and large enterprises are forced to close their doors. As a consequence, many organisations are worried about their financial situation, also because most issued loans were based on growth, not taking this crisis into account.
Immediately after the start of this crisis, many Dutch banks have acted upon their societal responsibility. Good Job! Banks offer a great variety of support measures, such as extension of credit standards and deferral of interest and instalments, to support clients through these difficult times. Bank employees are working overtime to answer questions of clients experiencing liquidity problems due to the Corona virus. While banks were part of the problem during the credit crisis, they are now playing a crucial role in the solution, thanks to strong capitalization and liquidity buffers.
A challenging promise While banks are well positioned to support entrepreneurs due to their strong capital position, mass demand of SME might lead to huge operational challenges. Banks already find themselves in need of capacity for large compliance projects, like KYC and CDD, wherefore managing this crisis and the expected mass demand for deferral interest and instalments will only increase this need. All in all, this might lead to huge operational pressure.
Making impact, now and in the future During this crisis period, the operational execution and adaptability of banks are being tested. First of all, the banks need to demonstrate to what degree they are able to support entrepreneurs efficiently. Secondly, this shows the ability of a bank to offer a solution for this crisis and at the same time keep the daily-operations up and running. For banks to actually position themselves as a partner in good and in bad times, it is necessary to deploy people, data and technology. Mature use of digitalization and data-driven processes are crucial to efficiently handle applications. Doing this, banks are able to decrease their operational pressure and increase the delivered client value. This way, banks can deliver their promise to support clients in need, today and in the future!
In the following blog we will discuss the pre-conditions for successful crisis management.
Joppe Smit Director at IG&H E: joppe.smit@igh.com
T: +31620352438
Authors Bas de Jong (bas.dejong@igh.com);
Laura Hendriks (laura.hendriks@igh.com);
Marijn Schneider (marijn.schneider@igh.com)
IG&H starts series of blogs for banks in the Corona crisis The banking industry takes a societal role in the Corona crisis! In a series of blogs we will explain the lessons Corona teaches us and the opportunities this crisis gives us as the banking industry. The notion that the corona virus is impacting every bank, is a given. The virus puts huge pressure on the industry resulting in a great amount of questions and uncertainties. What is the effect of this crisis for our clients and employees? What can we do to make sure we can scale up after this crisis? What will the market look like after the crisis and how can we continue business like before the crisis? This first blog focuses on the impact of the Corona virus for commercial clients.