COVID-19: Impact on the Banking and Financial Services Sector

Impact on the banking and financial services sector

If polls were held for nominations for the title of ‘Most Talked About Person of the Year’, COVID-19 will be the undisputed winner of the title, as it is already the most-talked-about phenomenon of this year, and is set to influence the course of the rest of the year.

With more cities being forced into a lock-down all over the world in a bid to curtail the spread of COVID-19 (the Pandemic), the immediate effects of the Pandemic are apparent, with trade, movement and all forms of economic and social activity coming to a halt. Whilst these immediate effects are far-reaching, the short-medium term effects of the Pandemic are yet to be seen and continue to unfold.

The banking and financial services sector is a critical sector of any economy, as it facilitates all forms of trade and is vital in promoting growth and development. While the banking and financial services sector has suffered its fair share of the immediate impact of the Pandemic (including reduced banking activities due to reduction in economic activities, increased calls on banks’ deposit liabilities as people scramble to provide for themselves in these times and attendant reductions in deposits as a consequence of reduced economic activities), we expect to see the effects of the Pandemic on the sector more clearly in the short-medium term. It is therefore paramount that the conversation on the likely short-medium term effects of the Pandemic on the banking sector begins now, to equip the sector on how best to deal with some of the potential impacts of the Pandemic on the sector.

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