COVID-19: This is what new normal may look like for commercial banks

The COVID-19 pandemic has brought about significant challenges to economies and businesses worldwide. As the world grapples with the impacts of the crisis, many are looking towards commercial banks as a safety net to help businesses bounce back. In a recent interview with CNBC Africa, the Managing Director of Equity Bank, Rwanda, Hannington Namara, shed light on the new normal for commercial banks and how they are adapting to the evolving landscape. Namara emphasized that the role of commercial banks in the economy, which includes intermediation, extending credit, and facilitating growth, remains crucial. However, the way banks operate is undergoing a transformation in the face of the pandemic. Namara highlighted the shift towards digital banking as a key trend, with Equity Bank implementing a range of digital solutions to cater to customer needs while adhering to social distancing and safety measures. The bank's digitization efforts, such as the Easy Banking platform, have enabled customers to conduct transactions, make payments, and access banking services from the comfort of their homes or offices. This shift towards digital banking is not only driven by the current circumstances but also reflects a broader trend in the industry towards greater digitization and customer-centricity. Namara also discussed the impact of the recent reduction in the central bank rate on commercial banks and their dealings with businesses seeking relief. The lowering of the repo rate aims to stimulate economic activity by reducing interest rates on loans, thereby making borrowing more accessible to businesses. This, in turn, is expected to support businesses, particularly small and medium enterprises (SMEs), in navigating the post-COVID-19 landscape. Looking ahead, Namara highlighted the importance of drawing lessons from past economic crises, such as the Great Depression and the global financial crisis of 2008, to inform monetary policy approaches that can aid in economic recovery. Governments play a crucial role in implementing facilitative measures, recovery funds, and monetary policies to inject liquidity into the economy and support private sector players. As commercial banks navigate the post-COVID-19 world, Namara emphasized the need for continued investment in technology and digital banking solutions. While banking services will remain essential, the physical bank branches may undergo transformation to adapt to changing customer preferences and safety concerns. Namara also touched upon the opportunities for growth in different segments of commercial banks, such as investment arms, post-COVID-19. Equity Bank is exploring avenues to invest in sectors like agriculture, trade, and medical services, in collaboration with customers to leverage emerging opportunities and drive economic growth. In conclusion, the future of commercial banking lies in embracing digital transformation, adapting to the new normal, and leveraging partnerships and investments to support businesses on the path to recovery.