Coronavirus: Banking Market

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Coronavirus: Banking Market

The overall financial market was expected to see recovery in 2020, however, due to the coronavirus outbreak, companies are now predicting delayed recovery or the beginning of a decline in the finance and banking market. The top banks in the industry generally are taking a serious stance on the issue providing customers with assurance that they will remain operational and provide donations and assistance in various ways to communities, employees, and customers that have been impacted by the outbreak. Details of the current and future outlook of the market and top banking messaging relating to the coronavirus have been provided below.

Finance/Banking Market Overview

Previous Banking/Finance Market

  • In 2018, the global digital banking market was valued at $5.18 billion USD with a CAGR of 15.3%. In the same year the global banking industry held $122.8 trillion USD in assets.
  • The most prevalent market driver is technologies such as machine learning and blockchainas well as quantum computing. Other drivers include economic changes, demographics, climate change, political policies, and regulatory tailoring.
  • One trend that is expected to gain popularity, especially in Europe, is Japanification defined as "persistent low growth, low inflation/deflation, and near-zero/negative interest rates." This could affect growth and profitability in the global market as banks sacrifice short-term gains for long-term growth opportunities.
  • While there has been slow growth in the banking industry in some countries over the bast few years, globally, there has been a decline in total assets of the market. This decline along with other economic factors, have lead experts to forecast a 25% chance of recession in the United States in 2020 with similar expectations globally.
  • Current consumer trends that are being adopted by most banking institutes include online and mobile banking, investment banking, and banking as a service (BaaS).

Effect Of Coronavirus On The Market And Forecast

  • With current conditions, the market could suffer minimal damage due to the coronavirus outbreak due to past yield chasing in the market, however, the Fed and the European Central Bank (ECB) have already cut rates to zero with Europe seeing the worst economic effects so far.
  • McKinsey anticipates hits to financial institution's performance in fees, interest revenue, losses, and expenses in the coming months. This will be seen in the following ways:
    • Fees: Due to lower consumer spending in retail environments, bank revenue generated from fees will likely fall as businesses close or cut hours and consumers stay home.
    • Interest Revenue: As a result of rates staying low or continuing to fall, banks will see net interest margins remaining compressed.
    • Losses: Credit losses will be apparent in small retail businesses, commercial banking, travel, tourism, and entertainment segments.
    • Expenses: Employees may occur start-up expenses in order to perform remote work and are likely to see wage losses as the market adapts.
  • Due to limited physical interactions between consumers and institutions, there will most likely be an increase in demand for digital banking services and other fintech digital services.
  • It is probably that some banks will take hard hits due to falling interest rates forcing decline of new accounts that some banks rely on to drive business. In addition, short-term loan activity is likely to fall due to consumers not currently working.

Suggested Actions In The Market

  • Due to the potential of the emergent situation to last for months, McKinsey suggests that banks immediately implement the following policies:
    • Normalize workforce measures for multimonth sustainability including maintaining a clean environment, identify affected physical channels, alter physical processes where appropriate, monitor control and customer service capacity.
    • Provide essential banking services to retail consumers while continuing to engage clients, analyze risks, support vulnerable clients, and mitigate risks.
    • Fulfill social mission to support households and businesses with credit.

Top Banks Messaging

 Bank of America Corp. 

Messaging Overview

  • The Bank of America has made it clear that their focus during the pandemic is to maintain community support and help financially where they can in education and business sectors.
  • The CEO stated, "We must all work together as one global community — public and private sectors, as well as individuals — to address this healthcare and humanitarian crisis. As the needs in our local communities continue to rapidly escalate, we must take swift action to provide resources where there are gaps, and help local communities protect their most vulnerable populations."
  • In addition, the company has increased hiring and pay for its employees in order to ensure their customers continue to receive the best customer service possible and to ensure that their front-line workers are adequately taken care of during a time of crisis.

Links To Press Releases And News Coverage

 Citigroup Inc. 

Messaging Overview

  • Citigroup has been vigilant in creating resources for employees, clients, and customers. The company has released several press releases that reported what they have done to support global efforts related to the coronavirus as well as creating a resource page on their website for customers to obtain information.
  • In addition, the bank is offering assistance services to qualified customers that have been impacted by the coronavirus.
  • In other efforts, the company has offered compensation to their front-line workers and urged all non-essential workers to work remotely to minimize risk.

Links To Press Releases And News Coverage

 Wells Fargo & Co. 

Messaging Overview

  • Wells Fargo has provided customers with several resources and updates on the global situation regarding the coronavirus.
  • The company has assured customers that they are doing what they can to mitigate risks involved with remaining open and are doing what they can to continue to provide customer support.
  • In addition to global relief efforts and small business support, the company has devoted several pages on their website to help customers understand what is going on in their business as well as globally during the pandemic. This includes a web page sharing their preparedness as well as what customers can do at home, a page for global reports, and a page that provides resources explaining the current impact of the pandemic.

Links To Press Releases And News Coverage

 Goldman Sachs Group Inc. 

Messaging Overview

  • Goldman Sachs Group has changed the layout of their website to cater to coronavirus resources. The company's landing page features a link to resources about the global situation including market insights and details of the impact of the pandemic.
  • The company has issued several warnings about expected downturn of the market as well as corporate takeovers. Overall, the company has expressed its support for the global community, however, they have focused heavily on the negative impact the virus will have on the market and its customers.
  • Because of this negative view, the company has also reached out to customers and allowed them to delay payments on loans and credit cards in March 2020. They will not be charging customers interest for missing a payment or issue any penalties on the accounts.

Links To Press Releases And News Coverage

 Morgan Stanley 

Messaging Overview

  • Morgan Stanley has very little resources specifically targeted towards their customers in relation to the coronavirus outbreak. While they did release a statement announcing a commitment to support relief efforts, most media coverage surrounding the company is discussing the forecast economic downturn that will come as a result of the outbreak.
  • The company expects to see the market take a hit or delay in recovery due to the social impact of the pandemic.
  • While most publications do not provide much in the way of direct messaging to consumers, the CEO stated, "During this unprecedented health crisis, Morgan Stanley is committed to doing everything possible to support the most vulnerable in our communities."

Links To Press Releases And News Coverage

 U.S. Bancorp 

Messaging Overview

  • U.S. Bancorp has dedicated a page on their website to current updates on their efforts against the coronavirus. In addition, the company has dedicated money to relief efforts, altered work conditions to be mostly remote, and provided assistance to customers that have been affected by the pandemic.
  • The company has remained positive with their messaging by assuring customers that they are doing everything they can to reduce further spread of the virus while maintaining essential functions. In addition, they have maintained announcements of every planned action in correlation with the pandemic as well as provided communication directly from c-suite executives.

Links To Press Releases And News Coverage

 PNC Financial Services Group Inc. 

Messaging Overview

  • PNC has issued announcements to their customers assuring them that they are doing what they can to remain open and operational while taking the appropriate precautions to reduce the spread of the coronavirus. The company has closed their lobby services to protect both customers and employees, however, they have continued to serve customers through drive up windows.
  • In addition, the company has provided customers with resources and coverage on the company, the global coronavirus situation, and the expected state of the economy due to the pandemic.

Links To Press Releases And News Coverage

 TD Group US Holdings LLC 

Messaging Overview

  • TD Bank has spoken in press releases about their current efforts to help the situation related to the coronavirus. Most of their messaging has been assuring customers that while they will be closing some branches, they will remain available to assist customers in need.
  • The company has provided relief efforts in the Health Care sector, created resources on their website for customers and investors to stay informed, and offered services to customers who have been impacted by the coronavirus.

Links To Press Releases And News Coverage

 Capital One Financial Corp. 

Messaging Overview

  • Capital One has issued statements and released resources for customers and employees that have been impacted by the coronavirus. The company has stated that they will be providing assistance to both employees and customers that have had issues with financial hardship or other impacts due to the coronavirus.
  • In addition, the company has assured customers that they are making every effort to assist in any way possible including allowing customers to skip payments on credit cards without interest.

Links To Press Releases And News Coverage

 Bank of New York Mellon Corp. 

Messaging Overview

  • The Bank of New York Mellon (BYN Mellon) has issued reports to their customers stating that their employee's health and customer service are their top priority during the pandemic. While they have transitioned most of their non-essential functions to remote work, they have remained open to customers in order to provide the services customers need in times of crisis.
  • The company has maintained mostly a business outlook on the situation releasing updates on lending rates, policies, and the market.

Links To Press Releases And News Coverage

 Charles Schwab Corp. 

Messaging Overview

  • Charles Schwab has taken very serious stance on the global pandemic. The company has shut down physical operations and issued a formal apology for any inconvenience to its customers. They stated that they will continue to provide virtual services to customers through remote workers.
  • The company has also maintained updates on the global financial situation due to the pandemic to their customers. This includes risks, emerging markets, and tax deadline news.

Links To Press Releases And News Coverage

 State Street Corp. 

Messaging Overview

  • State Street has provided messaging straight on the landing page of their website to explain to their customers their stance on the coronavirus outbreak. This includes a statement and a video of the CEO explaining the company's response to the pandemic.
  • The company has not provided any additional messaging to customers on their website, press releases, or in the news.

Links To Press Releases And News Coverage

  • After scouring the company press releases, news releases, and media articles from the last 3 months, we were unable to find any additional resources where the company directly discussed the coronavirus or their plans for customers or support. Below we have provided a link to a related article that mentions the company.
  • Biggest U.S. Banks Halt Buybacks to Free Up Capital for Coronavirus

 BB&T Corp. 

Messaging Overview

  • BB&T Corp and SunTrust Banks are both owned by Truist Banks. The company has issued statements and resources to their customers explaining their stance on the coronavirus pandemic including donation efforts and relief systems for customers and employees.
  • The company has made it clear that they are dedicated to the health and safety of the public and has limited physical interactions, however, customers can still schedule in-person appointments.

Links To Press Releases And News Coverage


Sources
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