Banks’ operational resilience during pandemics

Using the unanticipated and exogenous Covid-19 shock as a unique laboratory, we address the topic of business continuity at banks, where limitations to social mobility hindered the provision of branch-executed services. Namely, we conjecture that business resilience was higher if a bank had previously invested heavily in IT to increase its degree of digitalization, shifting more customers from branch- to online-executed services. In particular, we speculate that such investments should unfold greater readiness in migrating retail customers towards online payments during the pandemic, confirming that IT investments contribute to operational resilience. Exploiting thinly disaggregated supervisory data, our empirical analyses provide robust support to our hypothesis. Hence, digitalization seems to breed resilience at banks against unforeseen natural events; this corroborates the usefulness of technological investments also as an insurance against unpredictable risks and indirectly confirms the complementarity of the twin Green-Digital transition.