As the pandemic continues to wreak havoc around the world, affecting many people’s lives and entire industries (aviation, travel, manufacturing, retail), Modex – the blockchain database company – takes a look at the impact of COVID-19 on the banking industry, what are the current problems and what can we expect in the near future.
Speaking about the current situation, Scott Baret, Leader of Deloitte’s US Banking and Capital Markets, stated: “We do not know the long-term implications of COVID-19 for financial markets and banking and capital markets firms. But when normalcy returns, banks and capital markets firms will likely have learned a few lessons. These may include how to best retain operational resilience when confronted with future pandemics, and possibly how to design new operating models such as alternate work arrangements. COVID-19 may further accelerate migration to digital channels and connectivity.”
If we take a look at the banking industry nowadays, in the midst of the coronavirus pandemic, a few things stand out. There are individual and SME clients who experience cash flow pressures and there’s also a sharp increases in provisions, while investment demand in corporate banking is falling. At the European level, the impact of falling interest rates, reduced economic activity, and increases in loan provisions could be equivalent to a 3-5% revenue decline if the worst is over in 2-3 months. ECB have recently announced measures to react timely to possible downward risks, and central banks outside the Euro zone may seek to stimulate economic activity, as well as stabilize banking systems suffering from non-performing loans.
When it comes to the CEE industry, many see business continuity plans as a top priority. In times like these, when medical experts and governments around the world are recommending social distancing measure to prevent the spread of the virus, banks are promoting the usage of their digital channels instead of their branches. Moreover, stress testing on non-performing loans and provisioning became key to prepare for a longer-term downturn. In addition, risk is evolving with current operation: notaries and land registries are closing down, while some banks shut down unsecured lending in CEE.
One of the most important things companies must do to successfully surpass this challenging period is to enhance their business continuity management capabilities. In today’s context, remote banking services and product offerings are becoming more important than ever before. Optimizing administrative costs is another area on which companies should focus on. Streamlined processes and heightened automation increase overall operational efficiency, enabling real-time settlement, audit and reporting. Also, this reduces processing times, the potential for error and delay, and the number of steps and intermediaries required to achieve the same levels of confidence in traditional processes. The economic benefits are obvious: automated and more efficient processes trigger reduced infrastructure costs, operation costs, and transaction costs.
Modex, which is already involved in the fight against COVID-19, can ease the impact of COVID-19 in the banking industry thanks to its Blockchain Database (BCDB) innovative solution. By integrating BCDB into their operations, companies benefit from complete data security. Modex’s BCDB can help mitigate the effects of cyberattacks and prevent system failure as it offers high data availability, real time backup, and a distributed data structure. By connecting the database to a blockchain back-end, all the data is replicated across every node from the network to ensure immutability and integrity. Therefore, even if data disappears from the database, it can be automatically restored to its original state.
Modex, the blockchain database company, innovates thanks to its incredible team of experts and offers services for the entire blockchain technology ecosystem. Modex’s mission is to spread and facilitate the adoption of blockchain into society and to solve real-world problems using this revolutionary technology. Modex is a member at the Cyber Alliance to Defend our Healthcare, uniting with luminaries in the cybersecurity world to help combat the unprecedented series of cyberattacks that the healthcare sector has experienced in recent months.
Modex BCDB is a middleware that fuses a blockchain with a database to create a structure that is easy to use and understand by developers with no prior knowledge in blockchain development. As a result, any developer who knows how to work with a database system can operate with our solution, without needing to change their programming style or learn blockchain. For enterprises, Modex BCDB translates into enhanced data security, secure data sharing, streamlining of operations, and protection against cyberattacks.