A pandemic is not just life threatening, it is something extremely capable of bringing the world to a standstill. The effects of it doesn’t just restrict to the healthcare sector of the society. It is sure to spread roots into other systems that are a foundation of life itself. The COVID-19 pandemic is expected to bring with it disruptive economic fallout. The preventive measures like lockdown, taken by different countries have jeopardized the global economic growth. The income from the tourism and entertainment industries is sure to take a blow, thus hitting the economy pretty bad. The virus outbreak has left businesses around the world counting the costs.
Since the virus is scoring against the economy, the banks and financial institutions have a key role to play, especially in this time of adversity. What’s in sight is the possibility of the rise in NPAs, introduction of ultra-low interest rates and the suspension of non-essential services. The GDP rate pre-estimated to grow at 5% is now forecasted to reduce drastically. The damage that the virus outbreak is likely to cause to the banking system is being assigned by the industry and policy makers. Economists are of the opinion that COVID-19 has already started making its impact felt. The quarantine and lockdown measures is sure to impact industrial production and domestic demand, adding this will aggravate the economic slowdown of the past few years. But economists are of the opinion that banks can act as the doctors of the economy.
And things might seem a bit positive for the financial institutions. In the sense, there are several ways in which the corporate sector could struggle due to the pandemic which may in turn benefit the financial institutions. Problems like lower demand for products that are not a necessity, supply chain disruptions etc are sure to strike most of the companies pretty hard. In such a scenario, banks can offer financial assistance to such businesses and gain new customer relations that could remain even after the crisis.
What’s sure to develop in a time of crisis like this is the customer desire for digital banking services. The banks are expected to reduce their work force drastically, cutting down the services and promoting online services. E-banking is expected to boost like never before. Despite the fact that the virus is airborne, the chances of the virus spreading across surfaces is also confirmed, paper currencies being the most common among them. In such a situation, the consumers who preferred the conventional banking ways and who were hesitant on relying on e-banking services is now expected to give it a try. Most of the transactions would now be done online. The future of payment methods lie in cashless transactions for sure. Yet so many countries are still falling behind in effectively implementing this. Well, now is the perfect time to bring most of the population onboard as people are more open to explore their options, mainly out of necessity.