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Essentials for the post-pandemic bank


In response to COVID-19, many financial institutions have enabled alternative working models and served customers in new ways. Yet, the post-pandemic economic environment remains unexplored terrain.

Case in point: depending on the scale of government assistance, credit defaults could be higher than during the 2008 global financial crisis. Lower interest rates could prevail, potentially accelerating compressed net interest margins and impacting a key revenue stream for banks.

A new—and different—normal for financial services could compel banks to embrace continual reinvention of their business models and solutions. How should banks manage costs, transform operations, and use technologies such as AI and cloud to impact innovation and the digital delivery of products and services? All are in play. It could be a matter of survival.

The Great Lockdown put the profitability of most firms under unprecedented stress. It has triggered a global economic downturn that endangers the very sustainability of entire industries, such as travel and hospitality.

Facing elevated uncertainty, firms may be cautious. Lower consumption and weaker business investment could drive the biggest immediate impact. Lower inventory accumulations could arise from supply shock and weakened demand. A dysfunctional global supply chain could weaken the economic outlook of developing markets and increase the risk of countries defaulting on their debts.

The shape of the post-pandemic recovery will not be identical across industries and regional economies, and it could take a variety of forms, all influenced by the potential for future periodic lockdowns and growing political uncertainties.

Certainly, governments and central banks made headlines in their attempt to stabilize economic and social systems with unprecedented stimulus packages, granting banks the option of stretching lending capabilities and accelerating their active role in the recovery. Banks are instrumental to the effective transmission of monetary policies and stimulus packages, helping businesses to progress toward recovery and restoring consumer confidence.

As they move forward, financial institutions will need to explore and implement a new blueprint, one that propels operations, customer relationships, security, and compliance toward the different normal.

This normal will touch every corner—virtual and otherwise—of financial institutions. These organizations will need to adopt both a holistic perspective and a granular approach. Agility, responsiveness, collaboration, and perseverance can all contribute to effective strategies for renewal. The different normal will focus on the data-enabled client and a more human-centric business model.

Our report concludes with a seven-step action guide that can help you take your organization through the pandemic and beyond.


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Meet the authors

Sarah Diamond

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, Global Managing Director, IBM Banking and Financial Markets


Anthony Lipp

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, Global Head of Strategy, IBM Banking and Financial Markets


Likhit Wagle

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, General Manager, IBM Global Banking Industry


Randy Walker

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, Global Managing Director, IBM Financial Services Sector


Paolo Sironi

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, Global Research Leader, Banking and Finance, IBM Institute for Business Value