The effects of COVID-19 on finance

The current pandemic has plummeted the world into a state of emergency, the economy is losing its balance and company leaders are walking a tight rope. Governments have put together rescue packages that must now reach businesses that need help the most. Although the full extent of the effects of COVID-19 on finance remains unclear, there is little time left to prevent the worst. Therefore, it is crucial for banks to reach out to their customers and guide them through these difficult times.

It is now a major priority for banks to play their role in stabilizing the economic situation as soon as possible. To achieve this, they should first be able to supply companies with the right support to promptly ensure their survival. Applications for development loans from SMEs must be processed and checked as swiftly as possible. When granting the loans, banks must balance security on the one hand, and efficient support on the other.

On top of that, financial institutions must face the additional challenge of maintaining normal operations. For example, bank branches are being closed for safety purposes, and personal contact between bank advisors and customers is very difficult right now. Entire departments have temporarily moved to work from home, which poses several unprecedented administrative challenges. Several internal and external services have been made available exclusively online.

The urgency of digital transformation, becomes more than obvious given the current situation – especially in financial institutions. Due to lockdown measures and restrictions of public life, banks are adapting by creating appropriate offerings where they can reach their business partners under the given circumstances and encourage them to use these services. The logical alternative is to reduce dependency on the physical branch by extending the availability and scope of digital services.

In times of adversity, trust is a key factor in business. The current changes could help traditional banks take the lead, after several years in direct competition with fintech enterprises and neobanks. To meet the current global challenges, fintech and banks must work in close collaboration. This will allow them to take effective joint action. The demand for digital solutions is rapidly growing, and fintech has garnered experience in this area.