In the early stages of the US coronavirus pandemic, SRM reached out to banks and credit unions to gather insights on initial FI reactions and changes in customer behavior. A previous blog detailed the findings of that March survey.
In late June-mid July, SRM again collected responses on how perspectives had evolved once leaders had more time - and a bit more information - to assess their options. We received an even greater response, with impressive diversity in geographic footprint, asset size, and credit union/bank participation.
This second survey’s findings have reinforced the notion that financial institution leaders are not counting on swift resolution. Very few believe the dust is close to settling, and their strategies continue to evolve with new and accelerated consumer behaviors.
The Digital Leap, the Brick-and-Mortar Backstop
Roughly four-fifths of institutions across all categories reported double-digit growth in their digital user base, an ongoing trend well before COVID-19, of course. The forward jolt the pandemic provided to adoption, however, has moved the timeline forward by at least 18 months. It also helps explain, by a wide margin, why “Expand/Improve Digital Channels” was identified as the most critical go-forward initiative for both banks and credit unions. Pre-pandemic, digital initiatives were already at the top of the to-do lists; post-pandemic, they are critical to survival.
Look no further than Amazon for a case study in the importance of digital channels. Amazon, along with a select group of “Big Tech” players, is among the few companies to see significant stock price appreciation since the emergence of COVID-19. To put things in perspective, the $1.5 trillion market capitalization of digital-forward Amazon is more than the next eight largest (mostly traditional) US retailers, combined.
Somewhat more surprising, bank and credit union leaders continue to view brick-and-mortar facilities as a key component of their market strategies. “Decrease Branch Footprint” was the least cited initiative of those SRM put forth. Obviously, this initiative is not as simple as suddenly and permanently shuttering existing locations - or unlocking temporarily closed ones and returning to “business as usual” once public health concerns recede.
There’s very little “normal” about our environment, and respondents’ assessment of required recovery time elongated notably between March and June. Nearly three-fifths now expect the effects to be with us for 18 months or more, and it’s highly unlikely to be a linear path to recovery along that timeline, either.
More Change, Less Time
Decisions are rarely made with perfect information; however, the supporting data available to us recently is far less perfect than usual. Bankers are being given more to react to, and less time to react. In such high-stress times, human nature makes us susceptible to various types of bias.
In addition to revealing a variety of survey results reflecting peer perspectives, SRM’s new eBook considers multiple categories of decision-making bias - offering guidance on how to overcome the noise and make sound decisions for the long haul. Banks and credit unions with less than $10 billion in assets have a few more options at their disposal with regard to card portfolio optimization, for instance.
The Bottom Line: While the pandemic picture grows clearer this winter, perspectives will keep changing as leaders continue assessing their options. Needless to say, the next generation banking model remains a work in progress.
In these unsettled times, the unbiased input of industry experts is more critical than ever. SRM’s second survey eBook is now available for download, including charts and graphs.
Receive your free copy today; we hope SRM’s insights can help formulate your thinking along this journey.
For more content regarding COVID-19 trends for financial institutions, visit our Road to Recovery section in the SRM Academy.