{"id":248658,"date":"2020-12-10T13:48:19","date_gmt":"2020-12-10T12:48:19","guid":{"rendered":"https:\/\/www.testbirds.com\/?p=248658"},"modified":"2023-08-08T09:11:09","modified_gmt":"2023-08-08T09:11:09","slug":"a-challenge-covid-19-and-its-impact-on-the-insurance-and-banking-sectors","status":"publish","type":"post","link":"https:\/\/www.testbirds.com\/en\/blog\/a-challenge-covid-19-and-its-impact-on-the-insurance-and-banking-sectors\/","title":{"rendered":"A Challenge: Covid-19 And Its Impact on The Insurance and Banking Sectors"},"content":{"rendered":"
What we once considered normal is over. The ongoing coronavirus crisis has created instability, volatility, and uncertainty throughout the world. Its impact on the global economy has been immense \u2013 and its knock-on effects will take time to discover.<\/strong><\/p>\n “We’re recovering, but to a different economy.” \u2013 Jerome Powell, US Federal Reserve Chairman.<\/em><\/p>\n This is obvious when we compare 2020 with 2019.<\/p>\n For the United States, 2019 was positive with low unemployment<\/strong> and inflation<\/strong> falling under the Fed\u2019s target of 2.0%. Today, in the second quarter, growth has fallen by a massive 31%<\/strong>. Unemployment is at 14.7% with fifty million people out of work.<\/p>\n This has, unsurprisingly, led to a significant drop in consumer spending<\/strong> (a foundation of the US economy). And without a new stimulus package expected before President-elect Biden assumes office, this is unlikely to change before the end of January 2021<\/strong>. Such stimulus would, according to Wall Street, be a definite boon to the economy.<\/p>\n Regardless of how things turn out in the next months, the US economy is likely to take three years to recover.<\/strong><\/p>\n Within the European Union, things aren\u2019t much better. The eurozone economy has fallen by minus 7.8%<\/strong> during 2020 (though better than the -8.7% from earlier predictions) and is only expected to expand by 4.2%<\/strong> in 2021. The worst-hit has been Spain, Italy, and France, whereas Germany\u2019s GDP, overall, has fared best with a fall of 5.6%. Austria and Switzerland have also performed well, though with a clear drop from 2019.<\/p>\n The United Kingdom\u2019s long-term pre-Brexit outlook is unclear:<\/p>\n \u201cAlthough we expect a boost to economic activity as vaccines progress and confidence builds in the first half of 2021, the longer-term outlook will very much depend on the nature and duration of further restriction measures and the outcomes of the UK-EU trade negotiation, which could weigh on growth.\u201d At the end of 2020, however, eurozone debt looks likely to exceed 100% of GDP<\/strong>. This has the potential to further impact economic growth and, potentially, to result in financial concerns \u2013 particularly with bankruptcies and job losses \u2013 domestically and internationally.<\/p>\n On the bright side, as restrictions lift and businesses reopen, it\u2019s clear that the economy has shown improvement. EU economic output “will not return to pre-pandemic levels by 2022.” This means that the challenges facing businesses of all shapes and sizes are set to continue well beyond 2021<\/strong>. There won\u2019t be a quick and easy fix.<\/p>\n With today\u2019s instability and high volatility<\/strong> in global capital markets, all industry is in a state of flux. There is an adverse impact on valuations and business confidence. Banks in the US are looking at flat interest rates and the repercussions of a volatile election.<\/p>\n Things aren\u2019t different for EU banks. With asset quality low, so are profits. And while capital and liquidity buffers are still strong, potential credit risk losses<\/strong> are a possibility. As per the KPMG Global banking M&A outlook H2 2020 report<\/a>, \u2018A few European banks have already posted significant losses \u2026 to face a potential surge in bad loans.\u2019<\/em>.<\/p>\n There is also the potential for a global recession<\/strong>. A recent PwC COVID-19 US CFO Pulse Survey<\/a> showed 70% of respondents saw a potential global recession as one of their top three concerns with respect to COVID-19. Seventy-five percent were concerned with the \u2018Financial impact, including effects on results of operations, future periods and liquidity and capital resources.\u2019.<\/em><\/p>\n On a more \u2018micro\u2019 level, your operational issues<\/strong> must be considered in relation to COVID-19. FINTECH SURGES \u2013 AS LOCKDOWNS ADVANCE THE NEED FOR DIGITAL TRANSFORMATION.<\/strong><\/p>\n In this time of isolated lockdowns and social distancing, the use of online communication tools and financial technology apps has skyrocketed.<\/p>\n Ever since the 2008-’09 financial crash, fintech has been bridging the gap between quickly changing customer expectations – in how they manage their money – and traditional financial services. Today it’s all about personalized, immediate, 24\/7 access at a low cost. For fintech, the coronavirus crisis is a disruptive influence that is drving substantial growth.<\/p><\/blockquote>\n As we move into 2021, we\u2019ll have been 10 months into this pandemic<\/strong>. Regardless of the field of insurance<\/strong> you\u2019re involved in, whether general, life & pensions, health, or reinsurance, there\u2019s no doubt that many of your customers are in an uncertain, and for some a desperate, position. You may also be facing your own business continuity and employee issues. How well have your employees managed working offsite<\/strong> and has it affected your business<\/strong>? Are your digital offerings<\/strong> coping? Are you able to supply the essential services<\/strong> your clients demand?<\/p>\n \u201cTechnologies including machine learning, artificial intelligence, telematics<\/a>, and automation already presented challenges to the status quo across the insurance value chain. The COVID-19 pandemic has greatly accelerated that trend.\u201d Overall, when it comes to customers, insurers in the US and the EU are experiencing similar issues. A CALL FOR DIGITIZATION.<\/strong><\/p>\n Lockdowns have shown that an effective and secure online presence is essential. but are your claims management staff ready and able to work remotely – and is your online system ‘up to scratch’?<\/p>\n \u201cThere is a risk of losing customers to more digitally-enabled competitors moving forward, particularly in personal lines where many customers’ patience with non-digitized processes these days is low. .\u201d<\/em><\/p>\n Comprehensive testing can help.<\/p>\n<\/blockquote>\n As of this writing, there are two strong candidates for COVID-19 vaccines<\/strong>. But they won\u2019t appear tomorrow, and they won\u2019t deliver an immediate global cure<\/strong>. But it will come. Entering the \u2018new normal\u2019 doesn\u2019t mean it\u2019s \u2018business as usual\u2019.<\/p>\n \u201cIn the midst of every crisis. lies great opportunity.\u201d<\/em> As with any business crisis – and more so during this ingoing-pandemic – how you respond to your employees, your business partners, and your customers is essential. Getting it right can make a huge difference to your public perception and to your bottom line.<\/p>\n For a deeper insight, read the Deloitte article \u2018Responding to the coronavirus crisis<\/a>\u2019.<\/p><\/blockquote>\n While the pandemic won\u2019t be here forever, it will fundamentally change how we do business.<\/strong><\/p>\n Digitalization will expand quickly<\/strong> as it phases out more traditional ways of doing the same thing \u2013 particularly regarding customer interactions. The crisis will also impact how we assess risk, how we plan for future disruptions, how we develop business models that are able to better handle such changes \u2013 and how we test them<\/strong> to ensure they\u2019re not only ready but able to effectively deal with such disruption.<\/p>\n The true challenge, however, will be ensuring these solutions are fully optimized<\/strong> to meet the unique challenges. To find out how to truly strengthen your online business and ensure it\u2019s ready for any challenge, visit us at: Testbirds.com<\/a>.<\/p>\n These articles could also be interesting for you:<\/p>\n Make your Multibanking App a Success \u2013 Part 1<\/a> What we once considered normal is over. The ongoing coronavirus crisis has created instability, volatility, and uncertainty throughout the world. Its impact on the global economy has been immense \u2013 and its knock-on effects will take time to discover. “We’re recovering, but to a different economy.” \u2013 Jerome Powell, US Federal Reserve Chairman. This is […]<\/p>\n","protected":false},"author":51,"featured_media":248663,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"episode_type":"","audio_file":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","date_recorded":"","explicit":"","block":"","filesize_raw":"","footnotes":""},"categories":[24038],"tags":[20781,2331,20775],"acf":[],"yoast_head":"\n
\n<\/em> \u2013 Jonathan Gillham, Chief Economist, PriceWaterhouseCoopers.<\/em><\/p>\n
\nBut as with the United States, full recovery will take years, not months.<\/p>\n
\n<\/em>\u2013 Valdis Dombrovskis, European Commission Vice President.<\/em><\/p>\nThe influence of COVID-19 on the banking sector<\/h2>\n
\nFor example:<\/p>\n\n
\n
\nIt\u2019s been a time for hard lessons and radical changes for everyone. But there\u2019s no doubt that you\u2019ll emerge from this in a stronger place and armed with a better knowledge of your customers, and an improved ability to scale your operations<\/strong> and adapt your capabilities<\/strong> (particularly digital). Importantly, you\u2019ll have a greater understanding of how such radical events can affect the industry as a whole \u2013 while being able to react quickly and operate with agility.<\/p>\nHow Corona is affecting the insurance industry<\/h2>\n
\n<\/em>\u2013 Julie Goran, et al. McKinsey & Company.<\/em><\/p>\n
\nLockdowns have curtailed client\u2019s ability to meet face-to-face with your employees<\/strong>, which means being redirected to online\/digital services<\/strong>.<\/p>\n\n
The light at the end of the tunnel<\/h2>\n
\nAs with all industries, the banking and insurance sectors<\/strong> must consider how they\u2019ll tackle the next months \u2013 if not the next couple of years. This will involve close consideration of how customers are reassured<\/strong> and how their concerns are handled. And most importantly, how you earn their trust<\/strong> during this challenging time.<\/p>\n\n
\n– Albert Einstein<\/em><\/p>\n
\nMake your Multibanking App a Success \u2013 Part 2<\/a>
\nLoad & Performance Tests for the Finance, Banking, and Insurance Industry<\/a>
\nBugs Kill Trust & Revenue: Bug Testing in the Financial and Banking Industry<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"