Abstract
Digital transformation has been a growing focus in the banking industry for several years, with the introduction of digital technologies of the Fourth Industrial Revolution. The recent COVID-19 outbreak had a significant impact on banking, one being that its aftershock might lead to an acceleration of digitalisation efforts in core bank management departments. The reason is that the COVID-19 pandemic is dangerously unique. It differs from the 2008 financial crisis in that it is an exogenous risk that is not the result of the unravelling of previous financial imbalances. It is truly an uncertain event, with a wide range of outcomes that depends on unpredictable noneconomic factors. Therefore, the challenges facing banks and the course of action required are divergent from the situation post-2008. The purpose of the paper is to identify a few of the effects COVID-19 had on banks, but particularly focus on its impact on the responsibilities of internal management departments such as treasury, risk and finance. The reason is that the crisis highlighted some of the pressure points that exist in traditional approaches and technology solutions. The paper postulates that the pandemic might be the catalyst that speeds up the pre-COVID trend of adopting digital technology in treasury, risk and finance and thereby drive establishment of smart analytical centres. The advantage of smart analytical centres is bank management departments that will be better prepared, not just to handle future crises through intelligent and rapid decision-making, but also better equipped to enhance day-to-day operations in business-as-usual times. An implication emphasised in this paper is that to establish smart analytical centres, it is vital to study the applicability and benefits of digital technologies, as well as recognise the importance of putting a well-defined digital transformation plan in place.
Original language | English |
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Pages (from-to) | 381-194 |
Number of pages | 188 |
Journal | Journal of Risk Management in Financial Institutions |
Volume | 14 |
Issue number | 4 |
Publication status | Published - 1 Sept 2021 |
Keywords
- COVID-19
- Digital technology
- Digital transformation
- Smart analytical centres
- Treasury risk and finance departments
ASJC Scopus subject areas
- Statistics and Probability
- Finance
- Statistics, Probability and Uncertainty