MEMPHIS, Tenn.–Financial institutions, including credit unions, expect the effects of the coronavirus pandemic on their operations will be “severe,” with many saying they have already made decisions to delay various projects, according to a new survey.
Strategic Resource Management (SRM) said it surveyed its bank and credit union clients to understand their early response and evolving strategy for combating the effects of COVID-19 in the United States on their operations.
The Findings
Among the findings:
- Not surprisingly, 82% rated their online and mobile channels as “vital” to operations during the pandemic
- 79% of institutions have provided further education on the use of remote channels as a means of providing consumers unfamiliar or uncomfortable with digital channels access to their money and needed financial services during a time of high economic anxiety. “While the extent that these methods of engagement will become permanent habits is unknown, it is not unreasonable to expect that the longer the restrictions remain in place, the more likely the convenience of digital will turn a stopgap measure into a habit,” SRM said.
· Nearly two-thirds of respondents are allowing more than half of their staff to work from home. “Given the occupancy costs associated with commercial real estate, remote work (specifically working from home) may become particularly attractive to organizations across most verticals, including banking,” SRM said. “For banking, this shift would have implications for branch density, further accelerating the elimination of branches.”
- More than half of banks and credit unions expect “severe” impact (the second highest option on the scale) on their communities with nearly all other assessments split between “extreme” and “moderate,” SRM said. “What’s far less clear is how long this impact will persist. Survey responses place estimates of the expected duration of the economic hangover almost evenly spread from ‘less than six months’ all the way to ‘18-24 months,’” the company reported.
- Four-fifths of financial institutions expect to delay either most of their projects or “non-essential” ones. “It’s somewhat surprising that only very few respondents expect most projects to be cancelled, although this could change if the duration or severity of the situation increases,” SRM said.
Renewed Focus on Cost Savings
SRM further said it anticipates that financial institutions will renew their focus on realizing additional cost savings through vendor relationships, business process improvements and the application of automation.
“Though it is unlikely that any financial institution expected to break the seal on the pandemic continuity plan in 2020, the respondents of our survey appear to be taking the steps required to limit the impact of COVID-19 and, hopefully, expedite a recovery,” said Brad Downs, CEO of SRM. “Early indicators from our clients have shown that one critical focus will be on any project that can save money without sacrificing relationships with the consumers and businesses they serve. SRM will continue to research the impacts of the pandemic on financial institutions and make that information available to banks and credit unions in the future.”