In brief

In brief

  • While most banks will now be in full business continuity mode, they also need to consider the likely impact of COVID-19 on the banking industry and its customers.
  • They will be critical players, and with the right actions could significantly moderate the economic damage this crisis is expected to inflict.
  • Accenture has drawn up a checklist of the issues banks should address and the initiatives they should consider to support their customers, maintain their business, reinforce their organisation, and play a positive role in the economy and society.


The COVID-19 pandemic is a health and humanitarian crisis, as well as an economic shock. Banks have a pivotal role to play.

We at Accenture are helping our banking clients address the short- and long-term consequences. Beyond the obvious facts that the pandemic will test the mettle of the industry’s leaders and impose an overriding imperative to ensure service continuity, we believe the short-term impacts will affect four key areas of retail and commercial banking: credit management, revenue compression, customer service and advice provision, and operating model adjustments and cost control.

4 key areas for coronavirus & banking

1. Credit Management

NPLs will surge as consumers and businesses are unable to make loan payments

2. Revenue Compression

Rate cuts as well as a collapse in demand will have a top-line impact

3. Customer Service & Advice Provision

Restrictions on personal interactions will push customers toward digital channels for service and sales

4. Operating Model Adjustments, Cost Control and Innovation

Misaligned revenues and cost will require banks to improve operational flexibility and rethink short-term priorities

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1. Credit Management

The cashflow of many consumers and businesses will collapse as lack of demand flows through into lower business revenues and employee layoffs. These in turn will cause an increase in both commercial and retail non-performing loans, as borrowers struggle to make scheduled interest and principal payments. There are, however, steps banks can take to mitigate this, to help their customers survive, and potentially to emerge with stronger customer relationships:

  • Support government actions
  • Initiate credit forbearance and modification programs
  • Prepare for losses
  • Extend credit
  • Digitise to manage the demand for refinancing

2. Revenue Compression

In the first few weeks of the pandemic the banking industry market value fell to a lower level than during the 2008/09 crisis. This is because the market has factored in short-term revenue compression from multiple sources including:

  • Lower net interest margins
  • A drop in payments revenue
  • A decline in trade finance and cross-border payments

3. Customer Service and Advice Provision

A short-term impact of this pandemic will be rapid changes in customer servicing preferences. While many bank branches will stay open as a vital service, customers are increasingly looking to run their financial life through apps and online banking. How should banks react to this pivot?

  • Educate and train customers
  • Minimise physical infection risks
  • Personalise advice to consumers
  • Support virtual SME relationship managers
  • Accelerate digital sales and service

4. Operating Model Adjustments, Cost Control and Innovation

The cumulative impact of the three points above will lead to a misalignment of short-term revenue and expenses in the banking sector. We expect a range of impact from a 50 – 100 percent drop in PBT. As the demands of the next four to six months will be different from what was envisaged six weeks ago, banks should respond with as much flexibility as possible:

  • Carefully consider the tasks of the ‘war room’
  • Review project expenditures
  • Be flexible with vendors and suppliers
  • Invest in things that will outlive the virus

The future of banking after COVID-19

As banks grapple with the many challenges posed by the COVID-19 crisis it becomes clear that, whatever the eventual outcome, they will learn many valuable lessons about their customers, their own capabilities, and the market as a whole. These will serve them well in the years ahead.

We hope our deep dive into the implications of the crisis provides some nuggets of insight. As your business partner, we stand ready to provide whatever support you may need.

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