The Bankwatch

Tracking the consumer evolution of financial services

Banks’ considerations for the end of covid-19 lockdown


As mentioned by Zanny Minton-Beddoes, Editor-in-Chief, The Economist, today on Fareed Zakaria, (CNN) most people understand the logic and need for the Lockdown. But she went on to say, there is no clear way out of it, and a return to normal.

The defining model that shook the UK and US governments was produced by Imperial College by the team led by Dr Neil Ferguson. That document indicated with no mitigating effort, the US would see 2,200,000 deaths, and UK would see 550,000 deaths.

I will not attempt to compete with the analysis of the models performed by academics and some excellent pieces by Wired magazine.  Instead I remain focussed on banks and banking. My employer has had a high percentage of employees working from home for over three (3) weeks now.  How long will this continue?  What are the decision options on the table for Bank management across all Banks.  How many will remain on Work from Home status for an extended period?  This impacts all businesses not just Banks.

First some discussion on what the models tell us and what they do not.

Discussion on the models

The models have different sets of assumptions and outcomes.  However one constant is the focus on mitigation. Using the 2,000,000 deaths taken from the Imperial College paper this assumes zero mitigation effort.  By applying mitigation the peak is not only reduced it is spread out over a period of time. Mitigation will reduce spikes in need for ventilators, ICU and general call on medical resources.

Mitigation efforts are all at the Government Planning level, and include:

  • lockdown using physical distancing of at least two (2) metres
  • stay at home except for use of essential services.  Only go straight to essential service and return home
  • government defined essential services such as groceries, drug stores
  • border controls
  • travel controls
  • etc

Background for business consideration for returning to work

How does a Bank or any business think about the end of lockdown and returning to workplace for employees.

There is no shortage of news that works against returning to work, some specific, some introducing confusion (e.g. herd immunity):

  • Government of Ontario reference to secondary and tertiary peaks of covid-19 appearance
  • Dr Tony Fauci, considered to be an expert indicates the lift of lockdown is dependent on testing with rapid result in 15 minutes. [Ed: this is a reactive support option]
  • herd immunity debate described by Sir Patrick Vallance, the U.K.’s chief scientific adviser.
    • “To avoid a second peak in the winter, Vallance said the U.K. would suppress the virus “but not get rid of it completely,” while focusing on protecting vulnerable groups, such as the elderly. In the meantime, other people would get sick. But since the virus causes milder illness in younger age groups, most would recover and subsequently be immune to the virus. This “herd immunity” would reduce transmission in the event of a winter resurgence.
  • perverse impacts of lockdown making reference to out of season pandemics which along with migration efforts can result in additional waves of the pandemic
    • Social distancing can be so successful that when summer comes with its warmer temperatures and high humidity – conditions the virus doesn’t like – transmissions might trail off.
  • recent talk of an antibody test that would identify those individuals who had the virus and fought it of naturally.  Incidentally this could be an indicator of the hard to define herd immunity, which was predicted to see up to 60% of the population infected and get over it naturally

These considerations are at best confusing and at worst introduce health risk that is very hard for a Bank to digest as defined decision lints and to properly introduce their own mitigating efforts with informed business decisions.

Business Options for end of work from home

Here are the available options that I can see. Please feel free to ad yours in the comments.

  1. wait for the antidote (Q2 2021)
  2. wait for the antibody test (Months away)
  3. muddle through: slowly re-introduce working in the office for low risk staff.  Possibly introduce random or systemic testing of employees who have returned (if such is available)
  4. UBC on/ off approach based on Government indication that hospital capacity, particularly ICU, is adequate to accept new cases.  Other ICU options are at the Government policy planning level and probably beyond control, or meaningfulness for business options

Relevance to Bankwatch

The options that can be derived are not clear.  The references contained in this small post are a fraction of the analysis that exists.  Each business can never make adequate decisions based on the volume of data and information available.  Certainly the decisions each business makes will be unique to themselves, yet the risk is systemic affecting all business similarly.

As we indicated during the introduction, there is no clear end to lockdown/ working from home other than possibly the antidote.  But even the physical logistics of deploying the antidote and policing the result at the individual business level defy description.  Will individuals require a cover-19 passport identifying the holder as having been treated?  Interestingly China has already introduced a QR code covid passport.

There are no clear dates or events that business options can be associated with.

An unknown will be the Policy Planning actions taken by each Government.  In Canada we have the additional confusion of City, Province and Federal Government planning. The degree of planning integration over time will no doubt see some fracturing given the involvement of human nature.

Business options will come down to each FI determining that the need to return selectively (or en masse) in the interests of business and customer imperatives, will outweigh the assessment of health risk.

Written by Colin Henderson

April 5, 2020 at 14:58

Posted in Uncategorized

%d bloggers like this: