CHANGING THE PERSPECTIVES OF BANKING – COVID-19 PANDEMIC AND ITS EFFECTS ON THE ROMANIAN BANKING SECTOR

Abstract

In the last decade, the banking system has seen increase and decrease, progress and stagnation, resilience and acceptance, in terms of digital. It is desired to automate a growing number of banking processes and adapt customers to the new digital phenomenon. But what actually happened before and during the COVID-19 pandemic? What was the behaviour of the customers? What about the banks? Looking both from the perspective of customers and banks, this research paper presents a comprehensive scrutiny of the impact that the pandemic had. Firstly, the article refers to the general background of Romania, by comparing the financial reports of the five most profitable banks in the national system and by analyzing the situation of cashless or closing local branches. Likewise, it is pursued the strategy embraced by the banks to deal with the global health crisis. Concerning the credit risk highly encountered in 2020, the paper analyzes how it has become more substantial due to the general circumstances, but also provides an overview of the situation in Romania. Furthermore, digitalization has spread to all areas, as lockdown has limited people’s movement, so their quotidian activities needed to be carried out from home. Consequently, banks have been forced to quickly come up with a solution. In this way, e-banking has entered into a new stage. 2020 marked an unforeseen progress, something that banks dreamed of before. Finally, the paper aims to a blunt attempt into what the pandemic has brought to the Romanian banking system, making certain assumptions for the years leading up.