In this episode, Sean and Gina discuss the current state of banking in the wake of the COVID-19 crisis.
Intro: This is Believe in Banking, a podcast series for decision makers, influencers, and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. Here are your belief in banking hosts, Sean Keathley and Gina Bleedorn.
Sean Keathley: This is our first podcast for believe in banking. I’m Sean Keathley, President and CEO at Adrenaline.
Gina Bleedorn: And I’m Gina Bleedorn, Chief Experience Officer at Adrenaline. We work with our clients in the financial services industry, banks, and credit unions to help them create experiences for their customers.
Sean Keathley: We created Believe in Banking and this podcast to bring issues that financial leaders are facing to the forefront.
Gina Bleedorn: This week, we’re going to talk about the current state of banking post-crisis. How are they responding to this moment? How are they helping their customers get through this? So, Sean, what are you hearing?
Sean Keathley: The financial community feels a real commitment to the communities they serve. And 100% of the people we’re talking to are really focusing a hundred percent of their efforts in getting these PPP loans to their communities. They are working seven days a week, extended hours, sometimes even 24 hour shifts to connect those people that have been so disrupted. And so that is really what’s on the mind of the financial community right now is trying to lend a hand and help those people that have had disruption because of this pandemic.
Gina Bleedorn: You know, Sean, in addition to the PPP loans that they’re all struggling to figure out how to deliver, they are really freaking out about their branches. Right now they’re in a state of either partial or complete closure. Many are operating drive ups only, some have limited access to in branch staff via appointments, but all of them know that they have to reopen at some point and with state and national governments in a varying state of readiness proclamations as to the timing of when that will happen, it is only adding to the uncertainty and fear. They don’t know how to reopen operationally. They don’t know how to equip their branches and frontline staff with the tools that they need, nor how to make sure customers feel safe and reassured. So there is a tremendous amount of uncertainty, as they’re thinking about getting ready to reopen.
Sean Keathley: Really out of nowhere, the financial industry had to be ready to face this idea of serving their clients digitally only, so that’s a very challenging thing, even for the top five national banks that have the technology budgets like Chase and others that have been well-documented for the best mobile apps and the best websites, but they weren’t designed for the type of traffic we’re seeing. And that is a real challenge for these community banks and credit unions that have had adoption changing across markets and their branch channel is largely shut down. Maybe some drive ups are open, but this has just been a huge shift for everyone on top of the processing of PPP loans.
Sean Keathley: And it really is a Testament to the commitment from the financial industry to be a part of the solution despite the challenges. Money is not like booking a trip or watching a movie it’s very personal and there’s a human connection and there’s a trust component that for a lot of organizations is very important to them and that is broken when it’s only done digitally and that’s the environment we’re all in. And so we’re seeing an incredible effort by our clients and people across the industry, trying to fight on two fronts. One process an overwhelming demand to get loans so money’s flowing to people, but also make sure that people have access to information, advice and their money when one of their main channels is severely disrupted. And that’s the in-person visit at the branch.
Gina Bleedorn: Sean, as you talk about the difference between the big banks, the top five, the top six that are controlling of nearly half of the assets in the country versus the other 10,000 plus institutions that are essentially fighting over the other half, there is a big difference and also an opportunity here. The difference we’ve in the past thought of as trust versus time, meaning that as a smaller regional or community institution or even a very small community institution, you have trust, you have local presence, you have local currency literally and figuratively that keep people banking with you. And that is at odds with time saving convenience that big banks have to offer through very vast branch networks with the perception that we are literally everywhere you are physically. You can get an ATM or money anywhere. And digital sophistication with the promise that we have the best digital and mobile online offerings and tools and apps and options.
Gina Bleedorn: Well, now, that time element kind of just vaporized in a way. People are willing to stand in line again for long periods of time. They are scared and need to be reassured and that’s where trust comes in. So now the trust that you have always had that you have capitalized on, but in many ways, were losing to time be it a big banks, there’s an opportunity to use that trust again to keep your communities and customers alive with what you can provide as a community bank.
Gina Bleedorn: Sean, one of the things that has been mesmerizing in a way since this crisis started is the ongoing dialogue we’re having with our clients every day about their problems and what to do now. What are some of them saying? Have you heard from clients specifically about what they’re doing in the communities they serve and what they’re grappling with?
Sean Keathley: There’s a lot of them that come to mind, Gina. But one of them that’s top of mine is Origin Bank. Origin Bank is a very successful bank that serves the communities in Mississippi, Louisiana, and Texas. And they have a wide array of clientele across rural markets in Mississippi and Louisiana, and then major Metro markets like Houston, and Dallas, Fort Worth. And I think one of the things that I’m seeing clients like Origin do maybe better than ever is just communicate. Unfortunately in times like this, there’s a lot of scams people turn to take advantage of people’s state of mind. And so I’m seeing clients like Origin really over communicate. You’ll never see us ask you for certain personal information in an email and a chat. I think in some cases there are some towns where if Origin weren’t there, the town might not make it so they can look out their bank branch and see the small businesses that really rely on them to continue.
Sean Keathley: One of the advantages, the community banks and credit unions had, they had relationships with small businesses. And so when they were able to process these PPP loans, they started with those people that they knew first names and dealt with and they were able to actually get them funds that made the difference in them surviving or not.
Sean Keathley: I think education is something that we’ve been talking about. I think banks and credit unions take for granted that they’re financial experts. We’ve talked about the lack of knowledge with the youth of our country around things like credit scores and student loan problems and understanding some of the basic principles of finance and I think that’s under a huge spotlight right now. People are scared and their life is disrupted and these clients like Origin really are a fabric of their community and they are reaching out and helping people. They have resource centers, they have appointment-based banking in every single branch, obviously social distancing and being safe. But if people are worried and want to talk, they’re finding ways to communicate and I think that’s very settling for people in a time right now. If you go quiet in a crisis like this people worry.
Gina Bleedorn: Yeah, Sean, we’ve been saying shift, not silence. Silence is the worst thing you can do. In absence of communication there is fear and there’s already so much fear. We need to communicate now, even if we don’t have a full message to communicate. And I totally agree, you need to be over-communicating in every way, shape, and form and in a reassuring way and a very empathy led way and a very human way to your customers and your employees. One of our clients is a small credit union in Portland, Maine. Town and Country Federal Credit Union. They introduced in mid to late March, a crisis personal loan as a digital ad. It had a really low rate borrowing up to $10,000, a personal loan, and the response rate that they got on that was incredible. An incredible amount of increased call volume, interest, general awareness of the credit union not only as a financial institution that can help its members, but as a beacon of the community that can help the community. And that is the role. Many financial institutions are playing and need to be playing, if they’re not, in the communities that they serve.
Sean Keathley: Gina, like many of our clients, we are in this phase of reopen and a lot of it’s reaction. Really trying to reconnect in a way to serve broken communities, get funds back into the hands of those small businesses that are really the heartbeat of our towns across America. But as we start to regain hope and the weather’s warming up, and it’s pretty outside, we’re starting to realize this will taper. Although scary and can’t be done in a light switch, we are all starting to guess, what is our new reality post COVID? And it’s a really important question for the financial industry, given how important and how sensitive finances and money are. We have seen this trend, especially in urban areas where if it is a simple transaction that can be done digitally, many prefer to do it, but when it comes to real advice or education or life moments, there is a personal connection.
Sean Keathley: And I think one thing will happen for sure is you’ll see the new trend and normal to be that of what some of the more progressive organizations have been seeing, where the role of the location is a branch billboard. It is a flag that’s raised saying we are here to serve the community. It is a fabric of the community, is not one location in a Metro area. It is enough to be significant, but inside I think it’s going to be a more advice-based. And I think if anything, there’s going to be this balance of the new normal of safety and hygiene with just the human nature to crave interaction. And we’re going to see a delicate balance of that with financial organizations that are dealing with the very sensitive topic of money and advice.
Sean Keathley: So I think you’ll see fewer people post COVID lining up in branches to deposit a check that they could do from their couch, but I’m not sure that couple that’s expecting their first child and needs mortgage advice is always going to prefer to do that on video. And so I think we’ll be thinking of the trends we were seeing accelerated and I think there’s going to be a new normal of safe sound ways to have fewer people having more personal connections. And that absolutely is not how the current branch network in this country is designed based on the idea that many of the locations that exist today were designed and implemented even before digital channels existed.
Gina Bleedorn: I agree, Sean, and I think now more than ever to the points you raised, needing to rethink the network, needing to optimize, needing to modernize it, it’s just become a business necessity. It was where things were trending anyway, but now it’s survival and it’s mission critical.
Sean Keathley: Well, we’re certainly not futurists. And unfortunately I don’t have a active crystal ball on my desk. We do have our pulse on the industry and we talked to over a hundred of our clients weekly, and we get a sense for what they’re thinking. I think there’s a couple different ways this could go. Gina, what are your thoughts on the topic in terms of where this could head and maybe a couple of paths it could take?
Gina Bleedorn: Kind of like to pretend to be a futurist in my free time. But I think there are two ways this could go. One, is that transactions of any type, no longer occur in a branch environment. It is only for advanced sales and service consultation, maybe opening new loans, maybe opening new accounts, but maybe not. Thus the branch of tomorrow looks like a consultation center. Very, very different from the branch of today, much smaller, probably fewer of them because you don’t need to go to them as frequently. The other end of the spectrum is that this is just a little push towards the digital migration that was already occurring and transactions in branches go down a little more than they already were. And we see an uptick in branch network optimization and efficiency. And so again, the curve we are on just gets accelerated a few years as to where it was. But depending on how long this pandemic goes on and human behavioral response, that is hard to predict at this time, we don’t know where in that spectrum, we’re going to fall as we emerge from this.
Sean Keathley: As we start to think about our next podcast, it was interesting. The week before the pandemic broke, we started a series with our head of strategy, talking about best practice and communications being empathy led. And really pre pandemic, we were recognizing the companies that stand for something and think about people as individuals will survive and thrive in the future. And it’s just amazing to think how important that is given what’s going on today. So in our next podcast, we’ll talk about that more human to human contact versus thinking about human beings and big buckets that maybe aren’t as personal.
Gina Bleedorn: Yeah, Sean, and along those lines of empathetic thinking, they should ladder all the way into communications around operations, how you shift behavior in a way that is thinking about people first and people’s mindsets and individuals over a consumer. And so we’ll talk about practical solutions for how to reopen a branch with all of that in mind.
Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site, Believeinbanking.com.