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Resilience and recovery

  • Simon Gleave, Author |

As clients and their customers adapt to a new reality due to COVID-19, the sustainability of new operating models and customer interfaces throughout banks and financial institutions is vital.

In our COVID-19 Guide to maintaining Enterprise Resilience, we look at how enterprises in Asia Pacific can manage — and work towards alleviating — the impact of the pandemic. We cover the three areas of financial, operational and commercial resilience, setting out practical suggestions for short, medium and long-term considerations. The guide includes an interactive questionnaire, generating recommendations unique to each enterprise.

Financial risks

Regional, national and global banks vary in their levels of diversification (e.g. investment banking, commercial, wholesale, asset and wealth management), which may create pressures dependent on how countries and enterprises move through stages of recovery.

Many financial institutions are working closely with governments and regulators to support not only payments to citizens, but also other financial relief measures and stimulus, such as tax adjustments and payment holidays.

Clearly this creates the need to understand how these measures may impact their customers and how to support them (at speed). But there are also considerations for their own financial resilience, including augmenting staff to meet demand, the impact on capital strength, the impact of loan forbearance on corporate tax liability, and more.

As financial institutions are encouraged by governments to lend money to sectors that normally sit outside of their usual scope such as small businesses, credit risk processes must be reviewed. SMEs are a strong engine of growth in any economy, but as the typical data used for credit processing is not available, how do financial institutions work with regulators to ensure this is addressed?

Sustainability of new operating models

Financial institutions already maintain a high level of operational robustness. However, as the world faces a major crisis, new operational resilience plans have been accelerated and amended. We’ve seen a push towards a more agile workforce, and staff augmentation has been highlighted – with volumes in call centers rising and the continuation of core operational services being challenged.

Rapidly adapting technology and digital enablement at scale poses cyber risks and information-access challenges. As the pandemic forced more employees to work from home, data security moved up the priority list. Advancing digital operating models and customer experiences are here to stay. This new way of working requires stronger data and cyber considerations and standardization for the future. How will agile working continue to be supported, how will data be stored and accessed, and how will staff interface with customer data while protecting it?

Regulators are supportive of the need to adapt, but they expect changes to occur in an appropriate manner and timeframe. Decisions made now will have a far-reaching impact and must be undertaken with robust decision-making strategies. Compliance with rules, regulations and controls is key, as is the ability to measure, monitor, report and respond.

Acceleration of digital customers

As demand for new and enhanced digitized environments increases, including digital payments and cash, how will your enterprise continue to respond to accelerated demand and new ways of working from your customers and stakeholders? We expect to see innovation and a growth in digital products and solutions, as customers embed digital environments in their lives.

With the acceleration of digital services and interfaces, Banks will continue to reassess physical-branch networks, raising considerations for retraining staff in the new environment.

The longer-term impact on the credit environment in Asia Pacific and globally remains unknown, and banks must continue to focus on good outcomes — for both their customers and the wider economy.

KPMG member firms are standing shoulder to shoulder with clients to ensure you receive timely, informed and practical guidance, drawing on the latest industry insights and experience from specialists across the global KPMG network. You can complete an interactive questionnaire to help you assess the completeness of your immediate response to COVID-19. Questionnaire responses are generated for your own use and are kept anonymous, so do share your report with your local KPMG contacts if you’d like to discuss the results. Explore COVID-19 Guide to maintaining Enterprise Resilience.