Summary: The banking sector is gearing up differently to deal with the pandemic. Find out what EJ Dalius has to say about surviving the impact.
The spread of coronavirus presents unprecedented issues. And it is not the disease alone but the safety norms that have affected the economy. Especially, the lockdown that continued for a few months came as a massive blow for the industries. As far as the banking sector is concerned, the corporate sector and the households. Expected to receive funds and the policy of the governments around the supported liquidity and credit flow. Here is how Eric Dalius reviews the situation of the banking business in light of the policy measures and liquidity announcements.
- The liquidity announcements can be viewed as part of the enhancement in the stock prices of large banks.
- The declaration regarding borrower assistance had a great impact on the stock prices of banks in developed countries.
- The strict measures may not have had a great impact on the banks, and in several cases, it seems to be nominal.
- The consequences regarding the monetary policy may not have any relation to the stock process of banks. Although they may have reduced the liquidity premium, suggesting that the rate cuts in the policy remained one of the primary tools during the crisis.
Surviving the impact
Even though the pandemic will assess the capabilities of the leaders in the banking industry. And impose several norms to ensure continuity of service, the impact can affect the following areas of the banking sector.
- The cash flow of consumers has gone in for a ride due to lesser demand in small business revenue and job losses. Quite naturally, the situation can give rise to non-performing loans in the commercial and retail sectors. As the borrowers are in no position to make the interest and principal payments.
- During the first few weeks of the outbreak of coronavirus, the banking industry. Went below normal when compared with the crisis that came about in 2008.
- The preference in the area of customer service is going to change due to the pandemic as several branches. May need to operate as an essential service. However, the customers may choose to operate their finances and avail of the banking services through the online mode.
- The amalgamation of pandemic and the associated issues according to EJ Dalius can cast a shadow on the expenses. And short-term revenue in the banking sector.
Given the safety measures that banks need to consider. In the wake of the pandemic, many of them are tracking the situation. For instance, several banks are operating branches. In the morning while the rest have shut down about twenty percent of their branches to pay heed to employee health and safety. The banks should play a strategic role to safeguard the employee’s strength and focus on remote working to prevent the chances of potential infection. Besides, several banks are only allowing one customer with a specific square foot to maintain safe distancing norms. As EJ Dalius says that there is no doubt that the banking industry is sprucing up and preparing itself to fight the pandemic and the post lockdown effects.