BR ANC H E S
What The Future Holds For Banking After COVID-19
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It Could Be A Mixture Of Old and New Practices BY G EO RG E YACI K, S PEC I A L TO B A NK I NG NEW E NGL A ND
he coronavirus pandemic has upended the banking business much more so than the 2008 financial crisis. While banks may be in a better financial condition to weather this storm, the current crisis has had a more profound effect on how they operate and how their customers use their services: thousands of branch and call center employees are working from home. Branches are open only during limited operating hours or by appointment, forcing customers to bank online or through their phones. What are the long-term ramifications from the virus on the banking business? Will banking return to normal after the virus runs its course, or will many of these changes remain permanent fixtures? The answers appear to lie in digital banking, more customer engagement, remote work, and maybe most surprisingly, drive-thrus. Digital Banking Top Trend What does seem to be the case is that several trends that were already ongoing and expected to play out over the next several years have been accelerated over just the past few months, with digital banking being number one. “People who knew about digital services but never took the time to learn are all learning now,” says Barry R. Sloane, chairman, president and CEO of Century Bank in Medford Mass., which describes itself as New England’s largest family-run bank, with 27 full-service branches. “There has been a gigantic leap forward in the digitization in our industry. It will never look the same again.” “Our annual report for last year came out recently and the cover was on the digital transformation of banking,” he says. “We said it would be a thoughtful, organized, incremental process. Now all of us have been dumped in the digital pool.” “Clearly this almost forced movement of customers out of branches is going to cause a good number of them to be happy with digital channels, and stay on them,” agrees Terence Roche, a partner at Cornerstone Advisors in Scottsdale, Arizona. “People are beginning to be much more comfortable doing servicing transactions like
6 BANKING NEW ENGLAND | Issue Three | July 2020
remote check deposit and external transfers, and I think they’re slowly becoming more comfortable opening a new account online.”
IS VIDEO BANKING NEXT? “Clearly one thing banks are going to have to talk about is what this does to branch traffic,” he adds. “We have had an event that has forced customers out of branches. I think over the long-term this behavior would have happened anyway – it’s just going to happen a lot faster. What was probably going to happen over three years has been compressed into three months.” James Robert Lay, founder and CEO of the Digital Growth Institute in Houston, agrees that people have been forced into using mobile banking. “But does that mean the mobile app is the be-all and end-all? No,” he says. “People will still have questions. People still want to do business with people. If I was a community bank, I would be figuring out how to use a video communication platform to schedule appointments remotely, so if people want to talk to a banker face to face they can do that. You could remove the fear of a digital-only platform.” Indeed, according to Rutger van Faassen, vice president of consumer lending at Informa Financial Intelligence, while more banking services have moved online because of the virus, that doesn’t mean it will be all digital or nothing. “The current situation is forcing customer segments that prefer to engage with bank through a branch channel to use other channels, like phone, web, mobile, and chat. Once we get through this crisis the key question is if those people will change their preference after their experience with these other channels,” he says.
HOW TO ENGAGE “It also forces employees at financial institutions to think through how to engage and communicate with customers and colleagues through virtual channels and get comfortable with this way of engaging. On the other hand, it also shows us how important in-person
