82 percent of banks rated their online and mobile channels as “vital” to operations during the pandemic. That’s according to new research from SRM. Branch footprints have been in a multi-year downtrend. And the response to COVID-19 has seen widespread closures that will accelerate the move to digital.
“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.
While banks are generally moving in the direction of digital, institutions that have invested in technology and were further along embracing these new channels are generally experiencing less disruption.
As customers and employees are ushered out of branches, banks are responding with messaging encouraging customers to use other channels, according to the survey which gathered feedback March 17-27. 79 percent of banks have provided further education on the use of remote channels as a means of educating consumers unfamiliar or uncomfortable with digital channels how to access to their money and needed financial services during a time of high economic anxiety.
Financial institutions also quickly shifted their employees to work from home. Nearly two-thirds of respondents allow more than half of their staff to work from home. That’s despite a general banking regulatory culture that hasn’t wholeheartedly accommodated remote work models.
Given the carrying costs of real estate, working from home may become more attractive to banks. This shift could have implications for branch density, further accelerating the elimination of branches.
Banks and credit unions are still mainly focusing on servicing their customers. Longer term projects, like new feature rollouts and system upgrades, are being shelved. Four-fifths of financial institutions expect to delay either most of their projects or “non-essential” ones. Very few respondents expect to ultimately cancel these projects.
“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,” said Downs.
The industry is playing defense with Coronavirus and the resulting economic fallout. SRM anticipates that financial institutions will turn their focus on realizing additional cost savings through vendor relationships, business process improvements and automation. The uncertainty will likely increase the pressure to uncover cost savings and improve process efficiency.