As challenging as the Covid-19 pandemic is for community bank customers, it has been especially difficult for the banks themselves. Moreover, while experts may disagree on the timing and parameters of COVID-19 for the rest of this year and beyond, economic and political turmoil will almost certainly continue. The key for community banks is to develop “readiness” strategies to address these concerns and best serve their customers in a post-pandemic world.
Such “readiness” strategies going forward require accepting that world events do not necessarily align with an industry’s well-thought strategic planning. However, this does not mean discarding the present plan. Rather, an examination of a bank’s strategies employed to address the pandemic, coupled with a reexamination of the banks’ core strengths and financial needs of their customer base, should lead to future sustainability.
II. Covid-19 Lessons
A. Flexible WorkForce
Pre-pandemic, many community banks may have provided job flexibility to those employees who needed it. These banks invested in technology to enable remote-working and supplied the equipment employees would need to work remotely at home. Because such banks deployed this strategy pre-pandemic, they were able to have much of their workforce working safely from home when COVID-19 began.
Whether your bank fits this category pre-pandemic or has adopted it in whole or in part as a result of the pandemic, the issue is how to build on that successful experience. Simply put, community banks need to address how to create more resilience and internal capability within the bank’s workforce. Consider rethinking how you train and cross-train your employees. During a pandemic, as well as after, the bank will need its employees to back one another.
Also, consider hiring people who will work to expand their skills, thus becoming part of the “readiness” factor both during and after this pandemic. Encourage your employees to build deeper and stronger social networks inside and outside the bank. For a bank’s executives, learn before you need to know something. The bank’s community has an abundance of information and intelligence that can help the bank through an emergency such as COVID-19.
B. Digital Versus In-Person Banking
COVID-19 has brought several architectural changes to community banks as well as their much larger banking competitors. This has also greatly reduced in-person banking. Many community banks had adopted significant digital banking capacity pre-pandemic to remain competitive with their regional and national bank competition. Two schools of thought have addressed the future of digital versus in-person banking. Some experts predict that electronic banking is no longer the “wave of the future”; rather, it is both the present and the future, with in-person banking being a relic of the past. Others, however, see a continuing need for in-person banking, especially for community banks. Oddly, each side cites the COVID-19 pandemic as fully supportive of their position.
The digital proponents cite the pandemic-driven need for “masking” and “social distancing,” with concomitant architectural changes to bank offices, as presaging the virtual demise of in-person banking. That might be true during this pandemic for regional and national bank conglomerates, which have completely closed any number of their branch offices in major metropolitan areas, thereby forcing a large segment of their customers to bank digitally. However, it is decidedly not true for community banks.
What COVID-19 has proven so far is that when businesses are forced to close, and people are encouraged or mandated by local governments to stay home except for essential trips to address medical needs or groceries, people lose their inherent need to foster quality human experiences and relationships, often face-to-face. Community banks have thrived over the years because they are uniquely positioned to support those experiences and relationships, especially through in-person meetings with their customers.
During this pandemic, most community banks have seen their customers understand the safety, convenience, and value of the bank’s digital banking tools. Community banks must also commit to improving them by inquiring as to what digital tools the bank may be lacking, and which digital services proved to be substandard. For example, the bank’s call center may need to add bilingual staff, anticipating that a growing and diverse clientele may need more services provided by phone. Also, community banks must recognize that a “digital divide” exists between under-resourced communities, both urban and rural that lack high-quality digital access, compared with residents of large urban centers that take digital access for granted.
With these lessons in mind, community banks will continue to thrive once this pandemic has run its course.
By Martin B. Ellis, Shumaker Williams, P.C.