The on-going spread of COVID-19 has become one of the greatest threats to the economy and financial markets across the globe. To contain the impact of the outbreak, India has taken several measures, including a nationwide lockdown; limiting movement of the entire population; shutting down public places and transport, and urging the public to stay indoors, maintain social distance, and work from home. This resulted in economic disruption and the short term decline in activity for both large and small businesses considerably.
However, financial services & banks have been through the narrative of disruption for a very long time to prepare themselves for any kind of disruption. Covid-19 is a mass scale disruption not only affecting the banks but the whole economy and across the world. The outlook of the Financial service and digital payments sector looks no different and will follow a similar trajectory, at least in the short term. However, digital payments have enabled to keep the economies running while also playing a role in flattening the curve by reducing physical contact. The situation also offers a chance for banks and financial institutions to transition their collections in the digital form.
Digital payments allow people to access multiple services while in quarantine or social distancing. Contactless digital payments at the point of sale, such as Quick Response (QR) codes or near-field communications (NFC), can make it less likely for the virus to spread to others through cash exchanges. E-commerce initiatives, driven by digital payments and services, are also helping small businesses keep revenue flowing in this uncertain time. With the current situation, we foresee that digital transactions will become the new normal to the larger population in the country. And for this, we as a bank need to be ready to cater to the different demands of our customers. Thus, the industry’s stability and potential for innovation will play an invaluable role in rebooting the economy in the new normal.
Digital payments have become a necessity in these times. With most of the sectors that contribute to digital payments are still in a state of flux, it is still too early to ascertain the long-term impact of COVID-19 on digital payments. The situation entails we deal it in a collaborative manner than ever before. People need to collaborate irrespective of what type of financial service entity or industry it is. Financial services and banks riding on their payments and various services will play a pivotal role in ensuring the economy keeps running while proving access to essential goods and services to people. With uncertainty hanging around and social distancing norms to stay for a while, FIs and banks will be the important pillars for economic development this year.
About the author
Nitin Chugh is the MD and CEO of Ujjivan Small Finance Bank. He holds a bachelor’s degree in technology (electrical engineering) from Kurukshetra University and a professional diploma in marketing management from All India Management Association. He has previously worked with HDFC Bank, Standard Chartered Bank, HCL, Hewlett Packard and Modi Xerox.