As the world copes with the corona virus, the outbreak is causing widespread concerns and the biggest danger to the global economy since the 2008 financial crisis. The situation is fast-moving with wide impacts on consumers, businesses, and communities across the globe. Lenders have business continuity plans, but there are no clear contingency plans to face situations like widespread quarantines, extended office closures, and added travel restrictions.

In response to COVID-19, most lenders are developing their contingency plans quickly. Some are adapting existing plans to handle this outbreak, while others are starting from scratch. Confident action today can position your business to thrive tomorrow.

Here we identify five action steps lenders should take to navigate this unprecedented situation.

• Effective crisis management plan: Most  lenders already have business continuity plans, but those may not fully address the fast-moving and unknown variables of an outbreak like COVID-19. Lenders must plan and act on a crisis management basis before, not after or if, it becomes a necessity. Create a dedicated crisis management team. This team must conduct a contract risk assessment and identify preventive actions, manage customer-supplier contract disputes due to economic impacts or supply disruptions, and even be prepared to invoke “force majeure” clauses when required.
• Stand up operations to handle increased volumes: Given remote working and sickness-related resource constraints, firms need to establish a more sustainable approach to processing the surge in lending applications. This should include electronic channels to manage COVID-19 related loan applications and the extension of automated credit decision-making to as many applications as possible, allowing manual credit underwriting to be focused on exceptions and higher risk cases.
• Proactive Communication: The immediate priority is communication and assurance. Everyone is facing this crisis together, so be transparent about what your business is going through. Customers can empathize with brands facing a crisis if you communicate with them properly. Clarity and transparency are crucial in sustaining confidence at both a client and a market-wide level.
• Better use of digital capabilities: As businesses move from reacting to mitigating the impact of the outbreak, strategies to emerge stronger may come in focus. Accelerate digital transformations as the shift to remote working reveals gaps in IT infrastructure, workforce planning and digital upskilling.
• Business continuity strategies: As companies move from reacting to mitigating the impact of the outbreak, strategies to emerge stronger may come in focus. Protect growth and profitability through actions such as scenario planning, more frequent financial modeling exercises to improve resiliency, and new models that incorporate economic impacts of past pandemics.

The Path Forward

Eventually, the corona virus pandemic will subside to allow for the ‘new normal’. In the meantime, there is an opportunity to learn from the consumer and employee alike. For many firms, there will be new opportunities spawned by innovations tested, marketing models adjusted, and delivery networks transformed. There will be major winners and some losers that result from this unexpected disruption of business.