How the financial services sector is pivoting in a pandemic
Just a few short weeks ago, the banking landscape looked quite different than it does today. Despite digital disruption, branches still consistently remained the #1 acquisition method for gaining new customers. While branches may not all have been thriving, they did provide a steady engine of growth opportunity for bank brands, especially when strategically designed and deployed. However, there were already powerful rumblings coming to the surface for community banks. Big banks continued their domination in growth markets, and community-sized institutions were on a quest for scale.
Where We Were
Prior to coronavirus, two big hurdles existed for banks in scaling their institutions – urbanization and digitization. Currently 83% of the U.S. population lives in cities, and that is only expected to increase. Rising urbanization means banks in more rural areas have been seeing their opportunities pack up and move away, simultaneously losing both their deposits and their core markets. Digitization also presents community banks a big challenge. With giant technology budgets dwarfing the investments of community banks, smaller institutions need to invest just enough into the 3-5 core capabilities consumers look for most in their digital channels.
Where We Are
In response to the coronavirus outbreak, what financial institutions are doing now is an impressive pivot. Since they can no longer rely on their branches to process transactions and serve customers face-to-face, many are quickly investing more attention and resources into their digital channels – apps and online banking – and directing customers to drive-up windows, ATMs and ITMs for essential banking services. All of these channels existed in some form before the pandemic, even if consumer adoption of them was in anemic in some channels. In this new reality, consumers are more likely to embrace change.
In addition to serving customers, banks are following retail’s lead in visibly supporting their employees and staff with ways to sustain them working from home and taking steps to safeguard their jobs and provide financial support to their teams. Where they can, banks are also doubling down on their brand promise by investing in philanthropic efforts to help the communities they serve. While it’s expected that there will be widespread economic impacts felt throughout the economy, banks that are discovering ways to support their constituencies will be well-positioned to take advantage of post-Covid opportunities.
Where We Are Going
Before the pandemic, there were two central leverage points for community financial institutions to focus on in scaling their organizations – their brand and their branches. Both of those linchpins provided strength and stability to their institutions. Because of social distancing, branches have understandably become less utilized in delivering banking services, except in facilitating some essential banking activities, like mortgage and business lending. But social distancing doesn’t take away from the brand leverage point. In fact, in our current pandemic reality, the role of brand is amplified even more as we shelter at home.
It’s more important now than ever to over-invest in your brand.
Sean Keathley, President & CEO of Adrenaline, says, “It’s more important now than ever to over-invest in your brand. I know it is contrary to what we’ve always been told to do – conserve in the face of the unknown – but spending more time, energy and dollars on branding and advertising now, in the middle of a pandemic, really does make sense, and I’ll tell you why. History has shown us over and over that brands that make bold moves at exact moments like this are more successful and primed to seize opportunities when things return to more normal.” The more financial brands can capture consumer attention and affection during this moment, the better positioned they will be for the future.
In our next Believe in Banking feature in our new COVID-19 reality, we will take a look at what we think will help community banks prepare their institutions for a new era. From digital preparedness to remote relationships, this coronavirus moment is poised to bring about a revolution in financial services, leading to a new conception of the bank of the future.