Commercial Loan Automation
Small Business Banking
BirdsEye Viewthe silver lining
COVID wreaked havoc in our health, life and economy. The past two months were particularly difficult for banks around the country, boarding PPP loans incessantly with insufficient guidance and throwing hundreds of bankers into the mix. All hands on deck plus technology worked well for community banks, and the enormous effort bore strong results for our borrowers and our reputation.
Debt Forgiveness hasn’t caused similar strain, and, in fact, is coming about in a trickle, as we all wait for the government to make a decision on the sub $150,000 loans and other requirements. In the meantime, let’s reflect on the uncertain future and what opportunities have opened to us. There are many, more than you’d expect.
We’ve seen some changes already.
· Community banks’ response to PPP has been so strong, particularly on the human end through customer care and support, that household growth, especially in the business banking and commercial segments, has exceeded expectations. Banks are generating deposits beyond pre-COVID expectations, and Treasury Management revenues have outpaced goals in many banks.
· Another benefit to the banks rising to the challenge and helping customers navigate through this storm has been increased customer satisfaction and appreciation, which are expected to increase customer loyalty.
· Further, customers are more willing to aggregate their relationship in our banks more than before, bringing their entire business to the banks that are willing to serve their needs, PPP included.
· Banks’ adaptability to this new environment (I don’t call it “the new normal” because we don’t know what the new normal is yet) has been remarkable, creating a “can-do” spirit in many organizations. Out-of-the-box thinking became the norm, and solutions to practical problems are widely varied as a result. Some banks have developed or purchased technology solutions that facilitated current operations. Others leveraged their human capital. Whatever the path chosen, the job got done.
· Esprit d’corps is strong in many places. While battle fatigue may set in soon, the very fact that our teams were able to save so many jobs and onboard 10-30X of their usual annual volumes in mere weeks has been inspirational to many. It’s a bit like going through boot-camp together. It feels miserable while you’re in it, but looking back one can see the camaraderie and accomplishments that resulted and share memories like never before.
· Partnering with a variety of service providers, from consultants to FinTech and technology firms, proved to be the wing beneath our wings, enabling banks to pick up the pace and execute faster and better. Response rates from the vendors were intensely compressed in recognition of the urgency of the situation. That, in turn, helped community banks to help their customers faster, on par and sometimes even better than the larger banks.
· Decision making is changing. We’re shifting from our usual mode to acting WITH uncertainty and increasing our tolerance for continuous adaptations and added functionality. Executive teams are willing to accept imperfections at the launch of a process, and on-going changes, sometimes daily, as the process is refined.
· Customers’ acceptance of digital channels across the board has skyrocketed. Much has been written about it, but not enough is being done to make this shift more permanent with bank encouragement. Customers are more willing to self-serve, data enter etc. We have an opportunity to build on that willingness by being even more intentional about remote channel adoption.
· WFH is widely used. In many bank more than half of the workforce works from home. Banks are instituting shifts of branch and operations staff who come to work every other day. The implications are enormous, from space saves to repurposing people from one distribution channel to another (e.g. from branch to ITM or call center).
There are many more such changes. They all lead to a paradigm shift in very fundamental ways. You might recognize some and not all in your own bank:
· Making decisions faster and based on partial and changing information
· Doing things faster
· Increased tolerance for errors
· Increased acceptance of digital channels
· Acceptance of WFH as a workplace option
· Changes in information security, fraud prevention and other preventive tools to support the shift to different distribution models
The silver lining of this awful crisis is that it propelled us to a new way of building, delivering, fulfilling and maintaining our products and our customer bases. Most importantly, it opened our eyes to what is possible in today’s world. Some banks elect not to automate anything, and leverage their human resource advantage. Others marry the two, and create a new balance between the personal touch and digital communications.
My last article was titled: “Don’t Waste The Reboot”. This one starts adding granularity and examples to the concept. We should quickly go beyond accepting the change to embracing it and determining what it means for us. One notable bank changed its battle cry from “Let’s Get Bank To Work” to “Let’s Get Back Together”, reexamining every major aspect of delivery and making permanent changes based on lessons already learned from this pandemic. Other banks can do the same thing, finding the right balance for them between the old way of doing business and this new world.
Wherever your balance is, one thing is certain – things have changed dramatically for all of us in countless ways. All change is both painful and full of opportunity. It’s time to start focusing on the strategic impact of COVID on your bank and the opportunities it brings, while we keep the wheels turning and bracing for Dent Forgiveness. It’s a tall order, but I have confidence in our industry and its leadership.