If banks want to survive and thrive in and after COVID-19, AI and machine learning are very important, but the current approach to making these technologies happen simply isn’t fit for purpose. Automating development, deployment and monitoring processes unblocks the bottleneck.
that could threaten the very fabric and existence of venerable financial institutions if not addressed.
- The COVID-19 pandemic is awful in many ways and devastating human lives and livelihoods.
- There are unprecedented (yeah, sorry, that word) downside risks to the global economy as a consequence of both the pandemic and policy reactions to it. These are affecting businesses across all industries and countries; the business of money is no exception.
- COVID-19’s effects are different from a typical recessionary downturn in a number of ways, and unpredictable. Yes, the pandemic has felt like a slow-moving train wreck this year, but business conditions have been moving fast, and one month’s certainties quickly become the next month’s history.
So what’s a bank to do? There are three challenges to address; let’s call them the three stages of ‘Rona Response.
First, survival. Banks’ short and medium-term survival will depend on their ability to identify and mitigate risks as the economy changes during and after the crisis. One would think that, almost a year into the pandemic, this stage would be complete, but arguably the worst of it will only arrive once fiscal policy ‘life support’ measures finally expire. As it is, the number of large corporate bankruptcies in the US this year already looks to be on track for an all-time high, with correspondingly high risks of collateral damage—and correspondingly difficult decisions to be made.
resilience. Survivors will need to be proactive with identifying at-risk clients and help them before it’s too late. This will earn customer loyalty, better protect shareholders by reducing loan losses, and help banks and their communities to recover more quickly (thus being an investment in the institutions’ long-term viability as businesses). It will also shore up the odds of survival should the economy and/or the pandemic take another turn for the worse.
Finally, long-term adaptation and growth. The focus here is on preparing the post-COVID world, whatever shape it may take. It looks like we won’t see a return to “business as usual” anytime soon, but the ability to adapt quickly to whatever shape the “new normal” takes will ensure long-term profitability. There’s no time to wait and see how this new shape will pan out, as by then the most responsive institutions and fintechs will have stolen a march.
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