Responding to COVID-19: An Open Letter to Retail and Commercial Banking CEOs

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By Audrey Yap, Managing Director – Financial Services, Accenture Malaysia

We’re All in This Together

By now most banks are in full business continuity mode and you’re addressing the immediate challenges of protecting your staff from infection while providing much needed services to your customers.

Banks can obviously not be by standers as this crisis develops. We all need to be active participants and do whatever we can to help consumers and businesses weather the storm. 

While a challenging situation, this  is also an opportunity for banks to show that they  understand their customers’ plight and are committed to supporting them through the crisis. The upside of these difficult circumstances is that they can be used to build stronger, enduring, trust-based relationships with customers.

As the industry reacts, it cannot allow the perfect to be the enemy of the good. Numerous Accenture clients have immediately announced payment holidays for loans, resulting in call centers being overwhelmed. The triage of issues was difficult for under-trained staff, and there was a lot of confusion. But we agree with the calculus of our clients: it was more important to quickly signal the banks’ intent to be supportive partners and display empathy, than to worry about getting all the details sorted out before setting customers’ minds at ease.

These banks adopted the approach to a crisis that is often taught to leaders in the military: be clear about the intent, set a direction, get a basic plan in place, get started on the mission, buy some time to revise the plan, and then adjust as necessary*. This is also a good description of the agile way of working that  many of our clients have adopted in recent years. While it’s tempting to treat a crisis like this with a waterfall “plan, resource, and execute” process, we think this crisis calls for a focus on shorts prints within the broader purpose of always trying to do the right thing for your customers.

We hope you find at least one issue in this document that you and your team  might not already have thought of, and perhaps a few new ideas on how to  address this crisis. We have aggregated our ideas into a checklist that appears at the end of this letter. As always, we appreciate your feedback and support.

Through it all, let’s not forget that this is first and foremost a health crisis, and that our primary responsibility is to safeguard the health of our families, our colleagues and, indeed, ourselves. Stay well!

Four Key Areas will Demand Banks’ Immediate Attention

This letter is not about business continuity planning. Rather, we want to get  specific about the likely impact of the COVID-19 pandemic on the retail and  commercial banking industry and hopefully offer a useful checklist of issues to be addressed and initiatives to be considered.

Accenture is already engaged in helping many of our clients standup virtual work environments. For example, over the course of a single week, we helped a client get more than 60,000 staff on to the Microsoft Teams platform to allow them to work remotely. Everyday there are more stories of organisations doing extraordinary things to pivot their businesses towards different types of operating models.

We are also eating our own cooking. Most Accenture staff are working from  home, including more than 60 percent of our Technology Delivery Center professionals in India and the Philippines. We were already the world’s largest  user of the Teams collaboration platform, but over the last week our usage has jumped to over 30million minutes per day. If you’re interested in how Accenture is responding to this crisis by expanding remote work, read our report on the Elastic Digital Workplace.

Banks Should Focus Primarily on the Short-term Impacts in Four Key Areas of Retail and Commercial Banking:


1. Credit Management

By far the greatest and most complex impact of COVID-19 for banks will be on credit  management. The cash flow of many consumers and businesses is collapsing as lack of  demand flows through into lower business revenues and employee layoffs. For some  workers, like those in the gig economy and the restaurant industry, the impact will be immediate and severe as indicated by the spike in unemployment claims around the world.For those in regular salaried employment the short-term impact maybe limited, but in the coming months layoffs will rise as will furlough programs and other measures that will reduce household incomes.

If effective action is not taken, there will be a rapid rise in consumer and commercial NPLs as borrowers struggle to make scheduled interest and principal payments. There will also be a material impact on the auto and equipment finance sectors as borrowers struggle to make lease payments. We think lenders of all types should focus on a few priority issues:

Support Government Action

Beyond macro stimulus measures like reductions in interest rates, salary support programs, and direct monetary transfers, governments around the world are going to intervene to  mitigate the credit impact of this pandemic. Many of these efforts will aim to postpone the inevitable difficulties faced by current borrowers. For example, in the UK, banks have been asked to provide three-month payment holidays for mortgages and to suspend  repossession and court actions across most asset classes.

The challenge form any banks will be how to operationaliSe these programs. Many core banking and loan accounting systems are just not set up for this type of operational  flexibility at scale.

These programs will be particularly challenging if mandated payment holidays are not  universally implemented, but instead are targeted at specific segments of the population.  Many banks have some experience of these types of loan modification programs from the aftermath of the 2008 financial crisis (particularly for mortgages). But this time the loan  programs requiring modification maybe much more expansive, the timeline to get it done  much shorter, and there sulting operational complexity much higher.

Governments will also inject fresh capital into the economy via SME loan guarantees and  direct support for the hardest-hit industries. In markets with government-guaranteedSME  lending programs –like the SBA in the US and KfW in Germany –we will see a surge of  applications. Banks that aren’t structured to offer these types of loans should reach out to regulators to figure out how they can participate and maximise the capital deployed  through these channels, and potentially partner with banks that are setup to process these  loans. Those that do have the operational processes in place to make these loans need to  scale capacity quickly by training staff to originate and process applications, and simply to  be aware of the options that are available to borrowers. One of the challenges is that, while the intent from many governments to provide support is clear, it is hard for banks to scale capacity before the qualification criteria and application process have been detailed.

With ideas like “writing a check to everyone” being considered in the US, the industry  should have a collective response in each market to make the fiscal stimulus process as efficient as possible. Back in 2008, the US government sent physical checks that took two to three month s to reach consumers–but the aggregate drop in demand was far less than  we expect in Q22020. With P2P payment networks, push-payment systems like Visa Direct,  and other money transfer options that have appeared over the last 10 years, the industry  needs to be engaged to make economic stimulus easy to deploy. While it won’t be with us  for a while, this could have been a perfect use case for Central Bank Digital Currency that  could have been pushed to registered and secure mobile wallets.

For any clarifications or additional information please contact Audrey at 

To be continued in the next issue of MANAGEMENT…


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