Pavlos Mylonas: How the pandemic is propelling us faster into the future
NATIONAL BANK OF GREECE
The advent of Covid-19 will inevitably lead to change in the rules that till now governed our modus operandi, and will compel us to rethink everything from scratch – both in respect of businesses and their clients. Changes will be different in the short run compared with the long run. Businesses, I believe, will go through three stages over time. The first stage, on which we’re already embarked, and which involves heightened uncertainty regarding the next steps, as well as multiple scenarios, is the stage whose key objective is survival. In other words, firms will try to keep their annual results in the black and protect their balance sheet, at least until the outlook becomes clearer. The existence of sufficient liquidity at this stage will be crucial, and the role of banks in partnership with business support programmes set up by the state will be equally important. In Greece, the supply of liquidity through the guarantee programme of the Hellenic Development Bank, the TEPIX II funding package backed by interest rate subsidies for companies, and the option of a holiday on loan instalments that has already been offered by banks to businesses and individuals, meet the needs of all economically active players at this time.
In the second stage, companies that are more successful in dealing with the crisis will stand out from the rest and will seize the opportunity to grow their market shares. It will be a time of mergers and acquisitions. Banks will play a key role here also, by financing the most solid strategic and business plans.
In the medium to long term, the third stage – the innovation stage – will arrive. This is the phase where real change will be witnessed. The entire operating model will be transformed. For example, we’ll see a rapid acceleration in the deployment of digital technology. The needs of businesses will become clearer, since the needs of their customers will also have been clarified. The key to success will lie in the potential to recognize the competitive advantages of those companies that will be sustained in the future. The changes will require investment, which in turn will require funding – thus banks will play a crucial role.
Customers will be those who set the pace of innovation. Changes that may have taken years to be adopted prior to Covid-19 have now started to become part of our daily life. Work from home arrived and, with adjustments, will be here to stay. Customers will be divided into risk categories. The most vulnerable customer groups will change their habits in a more marked way, spending less on travel, transport, restaurants, and even on property acquisitions in the more densely populated urban areas. On the other hand, younger people will follow a different consumer pattern, more compatible with the past, albeit they will seek more digital services. Businesses and banks will need to reach out to them as discrete customer groups.
The banking sector and its services will be no exception. On the contrary, banks will be in the frontline of innovation, investing in digital media and developing products and services compatible with the new needs of their customers. Businesses will rely on bank funding to proceed to the next stage, while customer habits will be immediately visible through their banking transactions. Even if a solution to the pandemic is found by means of a vaccine or other treatment, the change in the operating model will continue unabated – because the shock caused by Covid-19 has propelled us faster into the future.
THE COMPANY AT A GLANCE
The bank was founded in 1841 and has made a decisive contribution to the economic evolution of the country over those 179 years. It accounts for 25% of the domestic banking market. It has 400 branches, while developing the most modern online network. It employs about 8,000 workers.