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here are clearly many unknowns surrounding the evolving COVID-19 crisis. Most prominent among them is the ultimate human impact of this now-global tragedy. It is too early to predict the ultimate extent of this pandemic, but what is certain is that people, societies and markets will be drastically changed by its impact.

This global crisis has necessitated virtually all industries to transform the way they work, at the same time throwing international financial markets into an unprecedented era of sustained volatility. With that backdrop of uncertainty, financial institutions (FIs) must embrace an organizational strategy that optimizes resilience, while preparing for a radically altered financial landscape that may emerge in a post-COVID-19 world.

Finding certainty in a period of uncertainty

Uncertainty is the “new normal”. Creating a strategic road map to navigate these remarkable times requires a recognition of two key certainties.

First, the global economy faces a triple shock, impacting supply, demand and market confidence. The supply shock is evident in industries such as electronics and automotive as shutdowns limit global supplies. Demand shock is most evident in the travel industry, as tourism grinds to a halt. Volatility in market confidence can be seen in the VIX, hitting an unprecedented 84 points on March 18 and the United States Federal Reserve interest rate on the dollar dropping quickly to 0.25 percent.

Second, this new normal requires the need to focus on people at the heart of crisis management. There has been a rapid shift to “work from home” policies in organizations across the world, in a step that may have seemed extreme just weeks ago. Split teams have become an operational norm in FIs such as Deutsche Bank, JP Morgan and Citibank, with banks in Indonesia making similar shifts. Protecting your people, ensuring operational continuity and communicating clearly to workers must be the mantra on which banks build themselves for the long term.

Incumbent players face additional risks, as disruptors could gain further market share during this period of volatility. Such institutions may be better positioned to rapidly flex to new ways of working in this evolving landscape.

Most worrying of all is the growing possibility of a global recession. As the impact of COVID-19 continues to expand, financial industry players must plan for a possible future that sees significant fall in demand for many of their products and services.

Strategic choices for financial institutions

In the short term, banks and financial institutions will require a focus on four priority areas.

1. Protecting staff and ensuring business continuity must be a foundation of operations. Accelerate remote working and required infrastructure. Enhance corporate health and hygiene guidance and support. Work to mitigate people-risk while adopting flexible workforce management. Over 1,500 companies in Indonesia, including major companies such as Bank Mandiri and Gojek advise employees against all travel, close offices and introduce widespread work from home and split teams practice reveal the critical imperative of these measures.

2. Supporting clients in seeing them through this difficult time. Banks, such as CIMB Group, are launching “care package” schemes to help small and medium enterprises (SMEs) with interest-only repayments, extended maturity terms on debt and/or trade loans for mid-corps and proactive, personalized asset allocation advice to wealth management customers. DBS partnered with Chubb Insurance to offer all its 5 million customers in Singapore complimentary insurance coverage in relation to COVID-19. “Moments of truth” with clients now will define stickiness in the long-term. Strengthening e2e credit operating models that is fully integrated across customer value chain (prospecting to disbursement) is a priority for banks regionally.

3. Managing physical networks and promoting alternatives that can adapt to changing local circumstances. Financial institutions must prepare for the potential lockdown of entire nations or regions, eliminating any possibility of clients physically accessing retail branches, business centers, or face-to-face meetings. Organizations should review and promote alternative channels, as well as accelerating essential functionality in apps and across digital platforms.

4. Engaging in active dialogue with public stakeholders, supervisors and governments to understand and align with evolving national policies. The Indonesian government has so far announced roughly Rp 158 trillion (US$9.57 billion) of economic stimulus. Solidarity is needed at this time, with FIs working to assist governments to implement critical measures required to settle markets and nurture potential growth.

There is substantial debate as to how long the economic side of this crisis will linger. In a classic “V scenario” COVID-19 will provide a short-term shock that sees a rebound of growth to follow. The longer this pandemic continues, the more risk of approaching an “L scenario”, where structural economic damage results in a lasting impact on growth. Previous health shocks such as Severe Acute Respiratory Syndrome (SARS) generally resulted in the aforementioned V scenario. Hence, the above short-term priorities must be backed up by medium-term imperatives.

Accelerate digital readiness for both retail and wholesale operations to become a more agile and flexible organization. Double down on technology capex that enables you to drive a digitally-adept business with efficient digital channels of communication and operation. Embrace data analytics that allow you to make informed real-time decisions to adapt quickly to changing circumstances. Adopt digital platforms that reduce your reliance on physical institutions.

Prepare for new opportunities which will undoubtedly emerge from this challenging period of transformation. Examples reported in Deal Street show bankers have been busy increasing client trading through fresh structures that respond better during volatility. For smaller banks, reduced revenues will result in higher strain on capital, and ideally regulators should encourage larger institutions to assist through capital injections or offering “banking as a service” support.

Reinvent models with accelerated discussions on portfolio of activities. Select those asset classes with a “right to win” in capital markets. This should also include greater analysis and quicker decision making regarding deconstructing the value chain — identifying which elements to keep internally and which to potentially outsource.

COVID-19 is first and foremost a human tragedy. Growing fears of a global recession are secondary to the human cost of this crisis.

Yet financial institutions play a fundamental part in building better societies, and their responses will be pivotal in mitigating the worst long-term impacts of this global pandemic.

This is a time to step back and strengthen the foundations of financial institutions. It is a time to embrace digital readiness to enhance resilience and operational continuity, to look to build more agile and responsive organizations, and prepare for the opportunities that may emerge from disruption. In short — it’s time for financial institutions to ensure the long-term health of their organizations.