Pandemics have always changed the world for some good and a lot of bad. Millions of people died in several pandemics in the past, as thousands are dying in the current pandemic situation going on. Coronavirus has turned several things upside down in the world. From businesses to industries, to systems and individuals, humans are adapting towards the situation day by day.
The banking system in the world is not untouched from the coronavirus pandemic that has continued its havoc to wreak upon us. Since social distancing is the new normal, and the socializing of humans is at an all-time low businesses are rapidly adapting themselves with the situation. Banks, in the pandemic, are seeing the rise in their digitalization. Many experts predict that the future of banking is digital where nothing would require the customer of a bank to present himself in the nearest branch, especially for any transaction. This prediction about the digital future of the banking system all over the world is out there before the coronavirus pandemic hit the world and took under control. It is just the case that despite knowing everything the way customers interested in the banks, transactions, businesses, brands everything was changing at a slow rate. The security and confidentiality, the use of data by banks, etc. are witnessing a review of the policies. The pandemic acted as a catalyst in the change.
Here are some activities of some companies in last few months to look at an insight into the developments in banking systems which the pandemic catalyzed that allow their customers to pay through a gateway of their own or a third party:
* PayPal and Honey: PayPal acquired the shopping assistant and rewards program company Honey for four billion dollars. This acquisition has been done after PayPal expanded its reach to the e-commerce sector in November. This signifies the importance and building of financial services that have become part of the new normal life after the COVID pandemic.
* Apple and Goldman Sachs: these two companies are giants in their own fields. One of them which is Goldman sachs is an esteemed rating agencies for economies through the world while other is a technology giant. Apple announced that the partnership will follow the same pattern when apple had joined hands with Amazon to use it’s a platform for payment. The new apple credit card allows apple users to lay using their own iOS digital wallet app.
* Visa and Plaid: Visa is known as a service provider and a big company in the global banking ecosystem. The pandemic situation has made the company to buy startups, several in number, aggressively to expand its business. In one such move plaid has been acquired by the common in five billion dollars.
These are a few examples of what is going on after the pandemic hit the World in the banking ecosystem globally and locally in various countries. All the procedures are going digital. World health organizations in its guidelines encourage contactless consumption or usage of any kind of services. Hence people are encouraged to order products prepaid and pay the businesses digitally.
Positive impacts of Corona Virus on the Banking ecosystem:
First, let’s talk about the bright side. One of the major reforms as we can say has been being witnessed in the banking system is the increasing virtualization of the bank customer interactions. Even earlier, digital services was there but inky as an option. But now we, both organizations and customers have remained that digital is not an option. It can be made the only choice. And so far it has not disappointed. Growing awareness and new generations familiar with advanced technologies have been becoming the bridge of conventional banking and the post pandemic banking system which is going to be the new normal. There were a lot of security concerns earlier as well, but slowly but hopefully they are being tackled with by the governments as well as the companies. The pressure from the customers has forced the banks to further compel traditional banking institutions to fast track their ddigital efforts to digitalize themselves.
And that is why, as we saw in the above examples of companies trying up with financial technologies service companies to handle their payment stems which are going to be digital.
More developments due to the pandemic in the banking system are reported as resulting in market instability, several acquisitions are taking place by large banking institutions of the smaller ones or bigger companies hiring banking service sector companies for their business transactions earlier that were almost none digital.
Negative impacts of coronavirus on the Banking system
The impact of the coronavirus pandemic has never been seen before. Not only the financial institutions are impacted the customer is also being affected and hence it is resulting in a valid change in customer behavior. The surge in the insecurity of customers to invest in safer options than playing at a risk has impacted the VC funding of existing and new financial technology firms. The worst effect of the pandemic situation can be said on those companies which are being shut down because bigger fintech companies have tied with traditional companies who were not digital at all before the pandemic.
Not only this but the coronavirus has made the world slow down and become still. Many countries because of the pandemic have been in full and partial lockdown for months and hence the transactions by customers to institutions using their banks and their payment services has become a downfall side of the roller roster ride the banking ecosystem is on. The fintech service companies used to charge a small fee on every transaction from their customers but since the number of transactions is touching new low daily the fees and the revenue of these companies are also becoming fewer and fewer day by day. The banking ecosystem is also affected by the closure of hardware providing companies and industries for their smooth functioning.
The pandemic has affected each and every sector of the economies globally. Things are never going to be the same as it was in pre pandemic world. And the baling ecosystem is no exception.