The Impact of the COVID-19 Pandemic on the Banking Sector

Abstract

The purpose of this paper is to contribute to the academic research in the management field, by exploring banking strategies implemented during complex crises, with a focus on the recent pandemic. To improve the comprehension of the economic consequences of the COVID-19 pandemic we analyzed the differences between the crisis from 2008-2009 and the crisis induced by the pandemic. The banking system has always been at the center of the crises, both in 2008 and in the 1930s, but this time the situation is different because now, we are facing a crisis that is related to systemic health issues. In the previous crises, banks were considered as part of the problem, but this time they are perceived as part of the solution. This approach increases the role of banks in the coronavirus crisis and the strategies adopted by banks influence the whole economy. The pandemic has changed the world economy entirely and impacted tremendously most businesses. The banking system plays an essential role in this situation because it is a key component from an economic point of view. In recent years, the banking system has adapted continuously – it has been reinvented to keep up with customer expectations and the need for cost reductions. The COVID-19 pandemic has accelerated digitalization in the banking system although, the need for innovation and digital strategies have been an important factor in banking even before the pandemic had started. We present furthermore an opinion based on a narrative literature review and a summary of the most important elements that redesign the banking system during the COVID-19 pandemic context. The literature regarding the COVID-19 pandemic and its implications for the banking system is still developing since the pandemic is an unfolding new experience for the world.