Banks are endeavoring to return to a new normal, looking at reopening branches while adapting to a changing world, as Egon Zehnder found out in its latest call with global banking CEOs.
What will the banking industry look like once the COVID-19 pandemic has finally passed? Different for sure, with banks and their customers calling for change, says Jean Pierre Mustier, Group Chief Executive Officer of UniCredit. “We’re using this opportunity to develop and drive a new multi-channel business model, very much focused on increased digital and remote services. This approach is generating support and buy-in from both team members and customers.”
This crisis will take a long time to resolve, but, Mustier says, there is light at the end of the tunnel – even if the tunnel is very long. But to misquote Timothy Geithner during the 2009 financial crisis, let’s hope “that light isn’t an oncoming train”.
The current uncertainty is causing the greatest stress for banks and their people, confirms the CEO of a Dubai-based bank. “No one knows where the end is and what the end looks like. No one even knows what the middle looks like and when normal will return.”
Nevertheless, banks are gradually reopening branches and head offices. UniCredit, for example, is rotating branch openings (open by appointment only) and available staff to ensure certain essential services are permanently available. The CEO of an Asian bank, which has recently opened its Wuhan branch, was surprised by the strong desire from colleagues in China to go back to work, particularly among female colleagues.
The next challenge is to work out whom to allow back into the workplace, says a UK bank’s CEO. “Employees with asthma or those judged at higher risk won’t be coming back for far longer so you have quite a difficult scenario when trying to think of your workforce. It all seems pretty complex at the moment.”
Managing Reputations
Going forward, banks face a backlash if the public sees them as a problem and not a solution, particularly when companies start to go bankrupt, predicts an UK CEO. Another CEO also admits to being worried about investors’ views of banks in future – actions taken by regulators in terms of pricing controls or stopping dividends, for example, might cause issues.
First quarter results are ahead, although these results are going to be “largely irrelevant” this year, says Mustier. As second-quarter GDP is set to plummet, a Brazilian bank CEO calls for “some clear messaging so that there shouldn’t be an overreaction in the marketplace”.
Each area in Brazil is deploying different strategies to manage the crisis. This means that the bank has had to deal with almost 3,000 differing local demands from nationwide authorities. “It’s a lot of noise when you’re running an organization,” he points out.
Meanwhile, UniCredit has been examining the potential rise of fraud, whilst also working on underwriting priorities and focusing on obtaining guarantees on the worst credit, while examining legal risks.
Mustier, who is also the current chairman of the European Banking Federation, says that the bank is working with the European Commission and the European Central Bank to try and ensure a future level playing field. For example, a SME in Bavaria could possibly receive more aid than one in northern Italy and subsequently gain more market share after the crisis. It is important to ensure there are similar and consistent offers for SMEs across the different markets to try to mitigate unfair competitive that could emerge.”
To read more about UniCredit’s activities, please visit: https://one.unicreditgroup.eu/
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