Impact Of Covid 19 On Economical Situation

The COVID-19 pandemic is resulting in widespread economic disruption to governments, businesses, and individuals all over the world. This has affected the banking industry prompting such institutions to play a role while they maintain their strategic business goals. . Banking institutions have devised plausible approaches to ensure that they participate in the fight of COVID-19. One of the main causes for the increased spread of COVID-19 cases is the circulation of contaminated cash for transactions. A study by World Health Organization shows that the use of cash was one of the main reasons for the fast spread of the virus. This has resulted in many banks discouraging the use of cash by promoting the use of their mobile and internet banking platforms to stem the spread of the virus. To deal with the problem, banks can encourage the use of mobile banking by offering lower rates or free transfers between banks and lowering interest rates on loans.

Banks can encourage their customers to use their mobile and online banking platforms to reduce the circulation of cash in the economy. By having the normal charges on rates of mobile and internet banking lowered, many customers can easily take this method of payment instead of opting to use cash. One of the major goals for banks is to increase customer digital satisfaction (Sampaio, 2017). Banks can also achieve this by increasing the transaction amount limits from their normal limits to higher limits. By doing so, customers who transact heavily do not have to visit the banks in turn act as a lever for interactions amongst individuals. The input from banks to minimize the use of cash will lead to the prevention of the spread of the virus, thus promoting the implementation of redress measures.

Another approach that can be used by banks is to lower their interest rates on loans. Since the world is facing an economic crisis, having a cut on borrowing costs is one of the measures that can assist many individuals and businesses endure the fiscal injury being caused by the virus. Banks can also introduce schemes for offering cheap loans to small and medium businesses to keep them going amidst the tough economic situation. These measures will ensure that businesses stay afloat as much as possible therefore preventing loss of jobs and protect countries’ GDP.

To summarize, COVID-19 has resulted in the global economy recording the lowest plunges in different sectors. The use of cash for transactions is one of the main reasons for the spread of the virus. The banking industry can formulate plausible measures to prevent the quick spread of the virus by encouraging the use of mobile money and lowering interest rates on borrowing.