It is essential that banks continue to develop a supporting IT infrastructure that maximizes agility and flexibility, as well as taking advantage of online banking if they are to weather the COVID-19 storm, says GlobalData, a leading data and analytics company.

Chris Drake, Principal Analyst at GlobalData, comments: “Several major banks have recently announced plans to leverage cloud solutions to improve IT efficiency, as well as others investing in emerging technologies such as artificial intelligence (AI) and blockchain. Banks should use the momentum of these major IT projects to strengthen their resilience during and after the COVID-19 crisis.”

As a result of COVID-19, banks need to prepare for reduced demand and delayed payments from customers, less liquidity from the government due to the need to finance deficits, and reduced income due to lower interest rates. Although these disruptions are expected to be short-term, banks should maintain a focus on the long-term benefits associated with key IT transformation projects, including the adoption of cloud-based IT architectures and fintech solutions, and the use of emerging technologies such as AI and blockchain.

Drake continues: “It is likely that, for many banks, digital will become the new norm once the crisis has passed, with banks investing in a broader range of digital banking offerings that encompass consumer and business lending, as well as the application of intelligent automation to mortgage and life insurance products.”

However, prioritizing online banking services and fintech apps has its own set of challenges, including the need to raise awareness and inform customers about the range of digital services offered and how to use them. Nevertheless, the accelerated push that banks have been forced to make in order to bolster online banking and fintech apps represents a key advancement in the digitalization of their business. 

Drake adds: “While banks are in a stronger position today to deal with major emergencies compared to the 2008 financial crisis, disruptions from COVID-19 are expected to be far-ranging and have long-lasting effects on the digitalization of banking.”