The global impact of COVID-19
The global COVID-19 pandemic is plaguing economies and societies across the globe, negatively affecting the lives of billions. The devastating health and economic impacts of the crisis — and the uncertainty it has brought — continue to harm public health and safety, disrupt daily lives, freeze business operations, increase unemployment, exacerbate vulnerability, challenge national governments, and test international cooperation in unprecedented ways. While countries struggle to “flatten the curve”, initial global panic and disarray is slowly (and unevenly) settling into the realisation that the impact of the pandemic will most likely be felt for years to come. The world will need to develop new tools and approaches to deal with the impact and the long term presence of COVID-19 and to adapt to a “new normal” — the details of which are difficult to precisely envision or predict today.
The financial sector must respond to the challenge
The global financial sector faces severe risks and challenges during this time. Many financial institutions that are not prepared or proactive will struggle to survive, ultimately restructuring or winding down. In the short term, financial institutions will need to adapt to an environment of restricted movement, social distancing, strict hygiene and safety requirements, and increasing reliance on digital channels; in the medium term, severe economic downturns will challenge client repayments and lending — resulting in shrinking portfolios and increasing arrears. Many financial institutions will resultantly face liquidity challenges with clients struggling to repay, local currencies fluctuating, deposits dwindling, and funders refusing to refinance.
At the same time, the COVID-19 crisis creates an opportunity for flexible and active financial institutions to safeguard and continue operations, demonstrating their commitment to their economies, societies, and clientele. The COVID-19 storm has also further revealed the benefits of strong client communication and process efficiency to financial institutions, providing a justification and impetus for institutions to make changes that will help them thrive in the medium to longer term.
IPC: providing crisis management support to financial institutions
IPC’s team of local experts working in-country and international experts supporting remotely allows IPC to leverage its crisis management experience and support a variety of types of financial institutions, including commercial banks, microfinance institutions, asset finance companies, development finance institutions, and impact investors.
IPC’s support can enable institutions to better manage the crisis, improve communications, manage the inevitable deterioration in portfolio quality, deal with liquidity challenges, strengthen data quality and security, help enhancing IT systems, manage human resource challenges, and build capacity in the midst of the crisis.
For more information about IPC’s work in this area, please see:
In addition, we believe that the following links could be helpful to financial institutions as they provide valuable resources and materials to respond to the crisis.