At a time when just the last four months seems like four years, it is almost unfathomable to consider where we will be five years from now.  Each month since February has had its own challenges.  Indeed, madness prevailed in March, although, unfortunately, not in basketball arenas.  Like every business concerning itself with how to provide a safe and healthful environment for its employees, financial institutions also had to revise processes to continue serving its customers with minimal face-to-face interaction.  For many bankers, this is the antithesis of a community-based institution, but an action that became a necessity if service was to be provided at all.  Remember a few years ago when fintechs were recognized as a threat and how all of us wondered how they could provide services without being in the community? Well, now that thought has been turned inward. How could community bankers provide services today without community interaction?  Well, we found out, but not by choice. Community bankers have stepped up, met the challenge and they have prevailed.

I never thought I would see another event as unprecedented in my life as 9/11, but here we are. At that time, dealing with the punch our collective psyche withstood, we could hardly imagine what the impact would be in the future. Now, almost two decades later looking back to the changes brought on by 9/11, they have become part of our everyday life.  It is hard to imagine life without those changes. Cataclysmic events can be the impetus for change. 9/11 perfectly fits that role. For example, the roots of Check21 are found in the September 11 attacks on the World Trade Center, the Pentagon, and in Shanksville, Pennsylvania. At the time of the attack the vast majority of checks were cleared at night, mostly transported by airplanes. When all air travel in the US was suspended for three days following the attack, nearly all check clearings were also suspended – an unprecedented event in banking.  An event that exposed a major risk in the workflow for check clearing; checks cannot be considered cleared until they reach their final destination. The ‘cure’ came on October 28, 2003 when the Check 21 Act was passed, and implemented exactly one year later. Fortunately, the technology underpinnings were already in place. Image capture technology had already been implemented at many financial institutions for over 10 years. What had not been developed was a protocol and format electronically clearing those images. This was carefully defined in the Check 21 Act. Fast forward to today and digital check clearing technology is ubiquitous in the banking community. Who would have thought that change would become so sweeping? Banking quickly moved on with greater dependence on technology and is much more efficient as a result. It was headed in that direction, but 9/11  provided the catalyst.The impact of this pandemic is again disrupting how financial institutions conduct business and service customers. And, as in the case of 9/11, technology exists, and in many cases, is already in place to provide a continuation of service – but virtually. If this pandemic occurred ten years ago, it would have been extremely disruptive. VPN usage was not nearly as widespread. Mobile check deposit was not available at most banks, regardless of their size. It was first offered in 2009. Internet banking, mobile banking, online account opening, mobile check deposit and remote deposit capture are pervasive today at banks of all sizes. All of which became the first level of service at many institutions for all their customers while branches were shut down.

Although bank customers did not have much choice when banks began shutting down, these new self-service deliveries may remain once this crisis has passed. Lobby and drive up traffic could very well continue to be reduced. In fact, one CEO asked me, somewhat rhetorically, why his bank needed branches at all. I suspect he is not alone in this thinking. When the dust settles, if your institution decides to reevaluate the performance of your branch network, my colleague, Jeff Morris, can provide a Branch Profitability Study and/or a Branch Closing Study to provide insight to your bank’s branch network.

The power of digital never has been so apparent. I am currently engaged to assist a client in reviewing digital options. There are some very powerful third-party solutions available in addition to premium services from its core vendor. These last few months have proven that just being good enough is no longer good enough. Digital delivery has risen to the top of every banker’s list of technology concerns. Even financial institutions with a robust digital strategy must reconsider its offerings going forward.  Maybe not for replacement, but definitely for improvement, where possible.

Institutions with inferior digital offerings will feel compelled to make changes to the services offered to their customers. Digital banking has been a hot topic for the past several years, and has now become imperative. Many financial institutions have online account opening services available to their customers. Those that do not, now wish they did. However not all online account opening systems are created equal. I have already heard from clients who are aggravated with the online onboarding system they have in-place; especially if it relies on the customer stopping by a branch to complete activation. Why? Somewhere the point was missed in enabling this process over the internet. Will a redesign fix the issues, or will it be necessary to replace the system entirely? For banks that were accepting only deposit account applications over the internet, will they now also accept loan applications, and vice versa? Digital everything is now the at the forefront.

Contactless payments appear to be becoming more in vogue. Consumers have spoken, contactless payments at small businesses has doubled since March according to Digital Transactions. While certain demographics have been resistant to using P2P, many community bankers have not offered P2P, or worse, did offer it but never promoted it, never educating their customers on the advantages. Unfortunately, for many smaller community banks, P2P appears extremely expensive. As consumers react to the pandemic and minimize human interaction, some will avoid touch as much as possible and seek these services out. Cardless cash withdrawals at ATMs , tokenization of payment cards, tap and pay cards and P2P will all be pursued by consumers. Bankers will need to now consider all  contactless payments as part of their ever-evolving digital strategy.

Fortunately, none of my clients had the disease spread through their staff, at least that I am aware of. But that was always on their mind. If the disease had spread through a department, the ability to provide operational support may have been severely impaired. Now is the time to review workflow systems to automate definable tasks. Many community banks have this function available through their core vendor. Until artificial intelligence takes over these functions (maybe never), workflow processing can provide machine-based assistance to guide even an untrained staff member through complex processes. Larger organizations were able to rely on the availability of chatbots to assist in the increase of call volume. This too could become solution for smaller banks in the future. A service I first blogged about nearly four years ago.

For the last several years, the migration from in-house to outsourced core processing has been considerable. I have assisted many community banks in reviewing their options when in-house no longer had appeal. Managing an in-house operation during the pandemic shut down added one more reason why it is falling out of favor with bankers. For those bankers still operating an in-house operation, I am available to discuss with you the pros and cons of both deliveries.

The overall impact of this pandemic will not be fully realized for several years. Certainly not now since it is not over. At some point in the future, we will realize that the then-current adoption of technology had its roots in this pandemic. No different than the present image enabled environment we take for granted today.

This is not the ‘new normal’ – we have yet to experience that. I’m going to set a reminder for 5 years to look back at this blog and reflect on the changes brought on by the pandemic. Then we will know what is considered normal.

About the Author