Effects of COVID-19: Payments and Banking
I’m watching and learning from global reaction to the spread of the COVID-19 pandemic. There’s no doubt that some countries have handled it better than others. Some have also had some “nasty surprises” …
The time for “blame games” and recriminations will come later; let’s first learn from the different types of “fallout” we’ve seen. My first article was on “Social Fallout”. After that I wrote about “Supply Chain Fallout”. Travel & Tourism came next, followed by a closer look at the Garment Industry. Then Leadership & Administration, followed by IT and Security implications. Academic fallout came next, then Economic fallout. Another aspect that would have impacted many was the effect on cities.
This week, I’m looking at another critical (and often-overlooked) aspect of life: banking (the ability to make and receive payments and store cash). We think little about the banking system: our salary (if we’re lucky enough to earn one) appears at a predictable time of month, our standing instructions or direct debits are paid out, and we’re able to use the rest as we wish.
One of the reasons that the banks were bailed out during the global financial crisis of 2008 – 2009 (to the misguided fury of those who saw them as the cause) was that it was the banks that ensured that the billions of dollars, pounds, euros, yen and other currencies continued to speed around the world. This meant that exporters were paid for their goods, workers were paid their salaries and those in need received their social security payments. Close the banks and all that stops. No payments to exporters, no salaries to workers, no social security payments.
Fast-forward to 2020 and COVID-19. The world has seen a boom in e-commerce and the use of digital banking. Amazon has had to delay “non-essential” purchases in order to handle the explosion of orders for Personal Protective Equipment and vital health supplies.
The Philippines (for example) is seeing an increase in “digital-only” banks as people make more use of online banking for social-distancing purposes. The main banks in terms of assets and branch networks may start adjusting their services more towards digital ones for the same reasons. Just as with non-bank businesses shifting more to a “work remotely” paradigm, so banks may well reduce their “bricks-and-mortar” operations to ensure customer and staff safety as well as responding to changing demand.
You might think that this would result in an increase in ATM usage. Again, the Philippines claim to have seen a 25% decrease in volumes (who wants to touch ATM keys that an infected person may have touched?)
“Internet Banking” services are already common. Usage will increase as well as other services linked into a “hands-free” world. We will go into physical bank premises less frequently than before, whilst online ordering will become more prevalent. Traditional “cashier” bank jobs will all but disappear, to be replaced by others in processing, programming and investigations.
We should also expect cashless payments to become more sophisticated, prevalent and user-friendly. Even the smallest street vendor will soon have low (or no) cost cashless payment ability. This is where current offerings simply do not yet meet needs.
I’ve spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in international financial services around the world running different operations and lending businesses, I started my own Consultancy to provide solutions for improving performance, productivity and risk management. I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email. My website provides a full picture of my portfolio of services. For strategic questions that you should be asking yourself, follow me at @wkm610.
Labels: Crisis Management, Customer Care, Financial
posted by William Martin @ 14:48
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