A Comparative study of Sri Lankan and global retail banking customer behavior changes due to the Covid – 19 health crisis and responses by banks

Abstract

Organizations and consumers worldwide were caught off guard by the COVID-19 pandemic and banks and banking customers have been no exception. Research surveys across the world address several changes in retail banking customer behavior due to the crisis. Notable among these is a sharp decline in bank branch visits and an increase in adoption of digital (internet and mobile banking) interactions with banks. Related to these behavioral changes are challenges faced by certain customers, especially the older and rural customers in adopting to digital interactions, attitudes towards internet based mobile banking, trust in banks, and concerns about privacy and security. In addition to addressing threats imposed by this crisis to banks’ liquidity and profitability, retail banks have also had to address above aspects of retail banking customer behaviors. Banks actions reported include redesigning their customer service to ensure business continuity, customer communication strategies, aiding customers in use of internet and mobile banking, enhancing cyber security, promoting customer trust, restructuring operations and staff scheduling (including work from home), and addressing employee morale and emotional issues, and organizational culture issues. This paper will report findings of a survey of 119 Sri Lankan retail banking customers to ascertain their behavioral changes and attitudes due to the COVID -19 health crisis. Then it will present a survey of top and/or Operational Managers of the 12 most prominent banks in Sri Lanka to ascertain how banks handled the COVID – 19 crisis. These findings will then be compared to findings on retail bank customer behavior changes and bank responses in 27 other countries based on recent research papers and industry reports. The findings from this study were that Sri Lankan retail banking customers reduced physical contacts, and increased digital interactions, with their banks. They also found the change useful and easy to handle, thus leading them to trust the banks with the privacy and security of information resulting in overall satisfaction with the change. These findings are consistent with findings across the globe. It was also found that Sri Lankan banks are sufficiently addressing service continuance and safety of customers and employees with administrative changes comparable to actions by banks across the world. However, Sri Lankan banks, compared to banks across the world, have not established formal cybersecurity policies or programs, communication and educational programs for customers, programs to enhance employee morale and emotional issues, and addressed organizational culture issues although they seem to be aware of the significance of these issues. The paper will finally present certain recommendations for bank Managers and areas for further research.