Most banks and credit unions started the year expecting a strong economy, steady growth and stable credit quality. Then COVID-19 upended the world. As a result, resources have been stretched thin as financial institutions have had to adapt to realities outside of anyone’s experience.
As states continue the fitful process of re-opening, the day-to-day pressures of reacting to new challenges is easing, a bit. This presents an opportunity to reflect on lessons learned so far, and to reconsider plans for the rest of this year. This would prove especially helpful if a second major outbreak occurs.
A good way to approach this is to assemble a small, interdisciplinary team to review coronavirus era operations. This team would be responsible for talking with a broad cross-section of the company to get employees’ input and ideas. Often bringing in outsiders to offer fresh perspectives and challenge institutionalized patterns of thinking also helps.
This needn’t be a lengthy project — a week or two should produce valuable insights and a good sense of direction for the short term.
The following three broad steps will help you capture the lessons of the recent past and create an updated list of action items for the next six months.
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1. Review Your Company’s Pandemic Response To Date
Review your institution’s pandemic responses while everything remains fresh in peoples’ minds. Highlight key issues that still need resolution and determine what was learned. Creating a timeline can help. Probe such questions as:
- What worked well? What didn’t?
- What concerns did people express most often? Where were the most common questions? What challenges did employees have in providing quality customer service? Front-line staff in branches and call center, and loan officers, will have valuable feedback.
- Were any weaknesses exposed in the digital banking platform, back office operations, call center, branch activities, employee preparedness, etc.?
- What did competitors do that you might want to emulate? When asking this question don’t just look at other financial institutions, but also consider what companies in other industries did successfully.
- What did we do with our marketing communications? Did they have clear goals? Were they effective and well-received?
- What challenges did we face as some employees switched to remote working? Are they all resolved?
- If your institution stepped up to help customers support new needs such as applying for Paycheck Protection Program loans, how well did that work What lessons were learned that could support similar development efforts in the future?
No doubt adversity forced your institution to adapt and grow these past few months by thinking beyond conventional practices and procedures. It’s important to create an institutional memory of this, to tap in the future.
2. Consider How The World Has Changed
It’s unlikely the economy will return to the pre-pandemic “normal” anytime soon — maybe ever. It’s critical to ask what changes your institution must make to remain competitive.
Take digital banking. When times were good many financial institutions remained reluctant to fully embrace digital transformation. But in a world of social distancing, the continued possibility of mandatory stay-at-home orders and self-regulated quarantines for returnees from “hot” states, who can dispute the importance of having a strong digital platform in place to meet people’s needs via mobile and online channels?
On the flip side there is much uncertainty about the future of branches. Will customers persuaded by circumstances to experience the convenience of digital channels eagerly return to physical offices once the pandemic subsides? What might this imply for the number of branches you need? And the layout, staffing and types of services offered in the ones you keep?
It’s useful to think through the implications of the pandemic and post-pandemic realities from the perspectives of your institution’s major constituencies:
Most community financial institutions serve a broad spectrum of customers in different demographic/psychographic segments, including consumers, small businesses and perhaps some corporate clients. Many are experiencing financial distress, which is affecting their needs and behavior. Understanding those needs and finding solutions is critical to retaining their business.
Customer analytics are a good starting point for gaining a better understanding of customer behavior. How have usage patterns changed for different segments? How many migrated to digital channels for the first time? How did their usage differ from experienced digital users? For the customers who continued to visit branches, where it was possible, what types of transactions did they perform? Are there unmet educational needs for this group?
Analytics will only go so far though. You’ll also want anecdotal feedback from front-line staff, along with hearing directly from customers through conversations, surveys or focus groups. There’s also good industry research available on larger customer populations.
Many of your employees continue to work at home. Going forward you’ll need a flexible plan that balances remote and in-office work while addressing concerns of employees hesitant to return. This poses new challenges in terms of maintaining strong, two-way communications, and keeping morale and motivation levels high.
In terms of training, are there employee skills that need to be enhanced? Technical skills are certainly in increased demand, but so are empathy, advisory and product knowledge skills as front-line employees face increasingly stressed customers. Have you explored ways to make expertise that may reside in specific pockets more readily available to customers and employees? Video chat can be a valuable tool for this.
New needs may have emerged in your community, while existing issues may have become even more pressing. Community organizations that provide valuable support to both citizens and businesses are experiencing higher demand. Funding may have fallen— continuing, and perhaps increasing, your support for these organizations promotes the health of your communities.
Helping these groups also demonstrates your institution’s values to current and prospective customers. People increasingly favor businesses that demonstrate a strong social mission. Many employees care about this too.
3. Define Priorities for the Rest of the Year
Many institutions may be looking at the year’s original planning documents and thinking about shredding them. However, based on today’s realities, some of those original projects may need to be accelerated. New ones need to be added. And some initiatives that seemed important before COVID-19 should be postponed — or simply killed.
“Must do’s” include adding resources to address rising loan delinquencies and losses. Other needs such as technology expenditures to upgrade digital banking systems and customer analytics capabilities may have received less support historically but are nonetheless critical to ongoing operations in a pandemic world. Marketing is another area that has become even more important as a means of effectively communicating with various customer groups.
Companies always face resource constraints. So identifying and prioritizing those projects that will provide the greatest benefit with respect to customer retention, acquisition and satisfaction is important. Initiatives that can result in improvements in operating efficiency are also likely to make the short list given the earnings challenges companies are likely to experience over the next year or two.
But keep in mind that it is important to not sideline key strategic projects that have longer-term paybacks — particularly those related to digital transformation. Pursuing new ventures in the face of what appears to be a major recession requires vision, determination and courage. Failure to do so will likely doom your institution to obsolescence.
Whatever plan your institution devises for the remainder of the year, keep it flexible. We’re in for an interesting ride.