The COVID-19 pandemic has affected every industry and banks certainly have not been spared. The situation for banks today is, however, very different than that which they faced in the 2008-09 financial crisis. Banks are generally stronger and better capitalized than they were then. And, rather than being a cause of the financial problems, banks are now seen as part of the solution—providing liquidity, delivering essential financial services, and acting as an intermediary and agent for governmental assistance programs.
The pandemic is changing consumer behavior and there are indications that some changes will be long-lasting, if not permanent. While banks dealing with retail customers and small and medium-sized enterprises (SMEs) have responded quickly, financial security has emerged as a top concern for customers worldwide.
Banks must an opportunity to strengthen their customer relationships by taking six key steps:
- Encourage virtual banking
Consumers have become accustomed to conducting business from home, either online or via mobile apps. Banks should review their online and mobile offerings to make sure that they are effective, easy to use and attractively priced. While it is a good time to promote cashless transfer products such as cards and mobile apps, there are other ways to do business while protecting customers. In the US, for example, Bank of America is deploying mobile units to designated areas to assist clients in need.
- Encourage virtual working
Many bank employees are nervous about returning to their offices and branches. Banks are reconfiguring their workspaces to provide separation between workers, but they should also be thinking about how to let workers continue working from home if possible. Happy workers connect more easily with customers, so it is important to provide those working from home with opportunities to connect and socialize with co-workers.
- Meet customers more than halfway
Many customers have lost their jobs, taken pay cuts and suffered other major disruptions through no fault of their own. Banks have displayed flexibility and a willingness to work with clients on mortgage and other loan repayment schedules, balancing their own financial concerns against customers’ ability and willingness to fulfill obligations over time. As we noted in our open letter to bank CEOs, this is an opportunity for banks to use their analytic skills and personalization expertise to communicate in the right tone and with the right messages.
- Emphasize financial stability and security
In addition to lost jobs and missed paychecks, customers have seen their retirement portfolios shrink. Banks should recognize customers’ need to regroup and reorganize by offering personal finance apps and expanding savings, annuity and retirement product offerings.
- Build and strengthen the brand
In times of crisis, consumers turn to brands they know and respect. In addition to treating individual customers fairly, banks should look for meaningful, localized ways to help the communities they serve. Citi, for example, committed $10 million to help community development financial institutions (CDFIs) in the US serve small, diverse entrepreneurs who may not fully qualify for federal government stimulus funding. And Italy’s Unicredit focuses on “Banking that Matters,” emphasizing sustainable value in terms of human capital, society and the environment.
- Think outside normal banking confines
Non-bank players such as Amazon have been experimenting with providing working capital and supply chain credit to hard-pressed SMEs. Such players have an abundance of cash, but they also have the data needed to make good credit decisions. But banks can play in new fields, as well. For example, they can use insights drawn from customer data to offer products like emergency credit facilities to SMEs that might not have previously needed such support, or they can offer retail customers access to non-bank products such as life insurance, based on an analysis of unmet needs. BBVA is offering customers BBVA Wallet to enable customers to pay for products and services using their smartphones.
Many economies are in different stages of reopening, but no one knows yet what a return to “normal” will really look like. We believe, however, that banks with a commitment to effective, responsible use of data in support of comprehensive digital strategies—along with the determination to safeguard the physical and economic well-being of customers and employees—will be well-positioned to rebound from pandemic-related disruption and identify new sources of profitable growth.