Adapted from the article that was originally published on by Jim Liddy, Chairman, Global Financial Services

It looks like we will be dealing with the effects of the COVID-19 pandemic for the foreseeable future. Given that, Financial Services (FS) business leaders across the globe are now focused on six principle challenges in dealing with the impact of this pandemic, and in dealing with the increasingly stringent containment measures that governments are putting in place:

1. Employees

How you treat your employees now will have a massive effect on their wellbeing, and consequently on their loyalty and productivity. Be very vocal with your support for any changes they need to make to work arrangements and performance targets in order to fulfil their responsibilities to their families and communities. Be a champion of good citizenship, and support containment and working from home where it is possible.  
In many countries, FS institutions are making significant changes to working arrangements – in some cases speaking with regulators to ensure that these meet compliance expectations – and this is helping them continue to deliver services to their customers. In the United States for example, the Commodity Futures Trading Commission have temporarily lifted several regulatory hurdles to trading from home to enable financial markets to function during the pandemic.

2. Customers

Customers, both individuals and companies, still have needs, and this includes regular reassurance from their FS providers on continuity of service delivery. They also need to know how their providers are dealing with issues directly related to COVID-19 – health and travel insurance, investment portfolio performance, online payment facilities and so on. For companies, effective digital delivery of services is essential while organizations deal with staff shortages, office closures and other public health protection measures (e.g. businesses refusing to handle cash). 

In Singapore, enhanced measures in the Resilience Budget 2020 will allow banks to quickly respond to their customers’ cash flow needs through the deployment of loans under the enhanced Enterprise Financing Scheme as well as the Temporary Bridging Loan Programme for the Tourism Sector.

3. Liquidity

FS companies need to thoroughly understand their available capital and liquidity resources and to assess the resilience of these. Central banks are under pressure to deliver stimulus packages in order to offset a larger, systemic liquidity crunch. This will bring down borrowing costs, but there is a risk that some companies will hoard cash and open credit lines to keep their businesses going through the crisis. Going into the future, a lot will depend on the duration of the crisis, and how much support is provided by governments to companies and households.

4. Supplier relationships and third-party dependency

FS companies (and their customers) have substantial third-party networks – vendors (including in-person agent networks), outsourcing partners, technology providers, etc. They need to regularly assess and monitor these third parties on information security, business continuity and other risk domains. The crisis will force companies to review these suppliers, assess which are most likely to be impacted, which are critical to ongoing business operations, and where they need to urgently mitigate risks posed by these relationships. 

5. Communications and transparency

Regulators expect FS companies to focus on and ensure continuity of their core operations, including support for their customers. As the business and the economic impacts of the crisis begin to bite, FS companies will need to communicate effectively with multiple stakeholders: employees, customers, shareholders and regulators. The crisis is a breeding ground for misinformation, rumours and bad information going viral, so FS companies need to be clear about the steps they are taking to manage the impact of the pandemic. And FS companies need to regularly assess their digital communication capabilities, and how to leverage such capabilities to communicate with customers and the broader marketplace. 

6. Scenario planning

FS companies are in the business of imagining the future – understanding the significant immediate challenges to society and economies posed by this pandemic, and how this will impact the interconnected financial system. They are using their scenario modelling and contingency planning expertise to help themselves and their customers to make good decisions in the face of a highly volatile operating environment. They will also need to incorporate new indicators, prioritized by the COVID-19 outbreak, into their decision-making activities.

At a time of crisis, it is important that we share our insights and experience as much as possible, helping each other to contain and mitigate the impact of COVID-19 on the financial system and the broader economy. 

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