How Will Commercial Banks Adjust to the “New Normal” Era? (Current Issue No.3115)

                  The coronavirus (COVID-19) pandemic has altered the business environment of commercial banks in two ways: 1) The speed of disruption has become faster; and, 2) There has been a “New Normal" environment in the commercial banking business. Such changes have inevitably affected business model of commercial banks.

            The impacts of the COVID-19 pandemic on the commercial banking business have resulted in four major developments: 1) The increasing role of contactless payment, though the development of a payment system structure is needed, namely e-KYC design or changing conventional cards to virtual cards or cards on mobile. In 2020, we at KResearch expect that payment transactions via mobile banking will continue to record high growth of approximately 60-90 percent YoY because consumers have increasingly become more familiar with mobile banking, in particular during the lockdown period ; 2) Credit policy has been changed and revised in line with the debt servicing ability of borrowers because business models and supply chains of corporate customers will likely change over the medium to long term; 3) Growing importance of cost efficiency as commercial banks are required to control costs, in particular during their business transition and when new technologies are used to enhance their competitiveness; and, 4) New business opportunities, such as new investment products to meet changing consumer behavior or banking as a service to create new income, all of which may help pave the way for commercial banks to expand the scope of their financial business during the “New Normal" environment, going forward.  ​​​