Post Covid-19 Recovery: Bank-Client Communication

April 22, 2020
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Post Covid-19 Business Recovery: Strategic Bank-Client Communication

(Published in the Financial Express in April 2020)

Dr. Shah Md Ahsan Habib[1]

It is recognized that the concept of banking revolves around TRUST and within banking functionality, banks safeguard the interests of their clients who entrust them with their money and use their services to undertake financial transactions. Currently economy and financial sector are passing through major changes and challenges. Practically at this moment, bankers must act in line with the fact that clients are more inclined to stay with the bank they trust when changes in the market occur, and trust of clients are built up through effective and regular communication and making them well-informed that can help easing customers.

Any crisis situation may cause a business to lose trusts of its important customers and counterparties. Companies and businesses also commonly face additional regulatory expectations.These risks and expectations are even more relevant for banks and financial institutions, whose business models are designed on public trust and relationship with the targeted customers. Thus, one key area of response for the banking institutions in any crisis situation like the ongoing Covid-19 is to respond adequately for avoiding a cascading loss of trust and relationships with their customers. Business recovery would really be difficult for banking institutions in the presence of the erosion of trust and relationships during the Covid-19 crisis period.

Banks are currently facing an unprecedented global crisis due to the corona-war, and customer relations are also taking a hit as a result. Volume of deposits have gone down as the households are holding higher volume of cash in a situation of exceptional uncertainties. Economic and international trade disruptions have already resulted unprecedented halt in the business activities in all regions of the globe, and the banks and financial institutions have started receiving negative implications of the situation. In this circumstance, customers are unable to visit many physical branches and not in a position to obtain completely uninterrupted access to services. The support systems of the banks and their performances are vulnerable as ever. All these have already shaken customers’ confidence. There are huge speculations that a banking crisis is in the offing, and the key stakeholders need to prepare for the recovery of the post Covid-19 banking and financial crisis. Logically, at this stage, these upcoming banking challenges are not in the priority list of the policy makers, rather they are engaged in fighting against Covid-19 to save the human lives throughout the globe. In the economic fronts, the key economic real sector activities and vulnerable sections of the society are understandably served by the policy makers and government machineries to save their livings. Banks are also engaged in the corona war field mainly by offering the crucial payment services to support running the basic economic activities and transactions. However, bank management must also start working and preparing for the post Covid-19 business recovery. As one of the strategic tools for quick business recovery, banks must maintain continuous communication with the clients at this critical situation within the social and physical distancing framework. 

There are thoughts that economic and business disruptions might contribute in piling up non-performing loans disbursed by the banks and financial institutions in a situation of contraction of production, sales, and cash-flow uncertainties. Handing credit risk might be truly critical in the post Covid-19 stage for banks. We all are aware that bank and customer relationship is very vital for handling credit risk; and effective communication with the borrower in the exiting scenario would help the borrowers to bring to the notice of the bank of the problem they are facing and giving the bank greater possibility of understanding and handling the problem in advance. Regular communication with the clients might thus be very helpful to get back their credits in time. Continuous communication is also crucial to overcome possibilities of moral hazard problem that are common in a crisis situation. The financial crisis of 2006-08 witnessed numerous instances of moral hazard when numerous homeowners struggled to pay their loan installments and loan defaults increased remarkably. The current hazard might be that the borrower are not having an incentive to do the right thing to pay back the loan as agreed. Continuous communication and knocking might work as a fruitful incentive tool to the exiting borrowers in the current situation.

First and foremost, it is imperative to make sure that a bank has assembled the right contingency team to recover from Covid-19. As part of recovery approach, banks need to quickly create a robust crisis strategy to keep customers in the loop. The first and most important step to ensure continued and strong customer communication is to accept that they are inevitably going to encounter problems with banking services along the way. As part of communication strategy, a bank must identify what does the customer need to know? It is crucial that banks do not just wait for the customer to ask, rather to identify by a bank, how can it keep the customer updated frequently during this crisis? It is important to connect with the customers on social media during this critical moment, and show empathy and help out where it is possible. This is a time when banks need to be sensitive, and it is a great opportunity for a brand to stand out during a difficult time. Practically, our communities need each other now more than ever in the form of support, understanding, education, and social media can provide just that and can be extremely powerful if it is used correctly. Banks can maintain their reputation, and be a source of confidence during this period of uncertainty by adequately informing customers about the severity and potential interruptions, and the measures undertaken in response.  Customers are expected to benefit from clear, timely and accurate advice that is updated by banks as the situation develops, both during and at the stage of recovery from the Covid-19 crisis. While the future may be uncertain, there is one thing that is right in the world of digital marketing and that is social media. People are on social media now more than ever, looking for respite or wanting to connect with friends and family.

The current situation may also be seen as a time of very good digital marketing. Since people are forced to be isolated, they are consuming more digital marketing and engaged in looking to social media for updates on closures and news; and are also observing how brands and businesses are reacting to the current environment. Thus it might be a great time to continue with digital marketing by a bank and stay ahead of the competitors. Regressing in the communication and marketing front and cost cutting in these areas might not be a good idea. Historically, businesses that have chosen a more progressive strategy of refocusing spending during a recession have outperformed businesses that made extensive cost-cutting. Without effective communication, no working relationship can be initiated, let alone building TRUST, and it is very important that the banks understand the importance of strategic communication at this crucial crisis moment.


[1] Professor and Director (Training), BIBM ([email protected]).

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