Covid-19 pandemic hit hard on every section of the society and every business in the world. The pandemic is rising in the last two months and is not showing any decline in May also. Like every other sector, Banking sector is also facing the heat.
Before the pandemic itself, the world economy was in a slow pace especially in developing nations like India and China. In India, Yes Bank crisis was a serious issue in the banking sector in 2020 and when the banks and government united to solve the issue, the pandemic came and disrupted the banking sector like other sectors.
Reports in April stated that In China, the NPA ratio will increase by about 2 percent and credit losses are set to increase by about 100 basis points. In India, the NPA ratio will be about 1.9 percent and the credit losses will be about 130 basis points. Fitch Rating Agency have already warned about the worst hit Italian banking system. Tensions are already at its peak in the Britain, France, Germany, Italy and other European nations.
The Covid-19 is a big lesson to the banking sector and needs innovations and developments to cope up with further challenges in future. During the pandemic, the banks are conducting their operations without physical interaction and going digital. International organizations like WHO advised people to move into Contactless payments to avoid the spread of virus. Banks have taken the necessary precautions to cope the challenges during the pandemic. Federal Financial Institutions Examination Council ordered US banks to check the capacity to handle digital banking. Goldman Sachs and HSBC implemented work from home, split-site working and digital services in their offices. Singapore’s DBS bank provided a robust digital banking service to its customers during the pandemic.
In India, the digitization of the banks had already started years ago and during this lockdown the use of digital banking boomed. National Payments Corporation of India launched RuPay card back in 2012 to facilitate electronic payments at all Indian banks. Federal bank in India implemented a new system for easy availability of loans to its customers. The system used Artificial Intelligence and was introduced in Kochi and Mumbai. ICICI bank introduced a robotic system to count the notes in 2019 and State Bank of India, India’s largest bank introduced a digital banking platform YONO back in 2017.It is evident that banks in India had understood the importance of digitization and automation.
The Covid-19 pandemic forced organizations to provide digital banking to customers and employees and those organizations who failed to go digital lost their business opportunities. Post Covid-19 will see a growing demand of Digital Financial Institutions & Fintech companies.