The ‘art and science’ of resilience: How FIs and fintech startups are rebuilding
- The pandemic will likely cause lasting changes in the way FIs and startups organize themselves.
- Participants saw resilience through the lenses of adaptability and flexibility, new product offerings and personalization opportunities for customers.

In early March, as LendUp CEO Anu Shultes returned home to the San Francisco Bay Area from a fintech conference in Seattle, she began to come to terms with the extent to which the coronavirus would impact her company’s business.
“[Seattle] was an early epicenter. It was an early window into how serious this could be,” said Shultes, at the Tearsheet Resilience Conference. “I was on the ground in Seattle one day of the conference, and by the second day, only half the people showed up. I came back home and there had been four deaths that night.”
Shultes said her team began to take stock of how her company, a lender for credit-challenged customers who typically earn between $45,000 and $50,000 a year, would need to adapt. LendUp needed to move quickly, with a shelter-in-place order being imposed in her jurisdiction. It became apparent that on top of moving the team to remote status, the company would need to consider how it could serve its financially strained customers.
“They have a bank account, but they have no access to any kind of [credit] products,” remarked Shultes. “They have zero in savings, so when they have a mild shock, we end up being the provider for them.”
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LendUp wasn’t alone in facing these obstacles, as industry players -- from large banks to lean startups -- developed strategies to weather the pandemic. To illustrate the severity of the crisis, consider some large incumbents’ cautious approaches nearly a half a year into the crisis. Citi postponed its return-to-work plans in 13 states, citing health and safety concerns; meanwhile, TD and Scotiabank extended remote-work arrangements until 2021.
The industry is still grappling with how COVID-19 will affect how business is carried out and how products will evolve. Participants at the Tearsheet Resilience Conference reflected on their adaptation strategies and the enablers for success in a post-pandemic environment.
To continue to thrive, companies need to evolve with the changing needs of the consumer. Indeed, trends gathering strength before the pandemic accelerated, including the rise of cashless payments, digital onboarding, paperless identity verification and modernized infrastructure delivered by players like Marqeta, Galileo and other entities fueling digital financial services. Meeting the needs of challenged customers requiring additional support was also a major part of practitioners’ resilience strategies. The pandemic also tested the extent to which existing business continuity and product strategies were going to bear fruit.
Participants agreed that regardless of the outcome, the pandemic’s legacy would include a shift towards digital financial services for end users, greater acceptance of flexible and remote work environments and an enhanced need for transparency internally and externally. Alongside the pandemic, heightened consciousness around racism, inequality and social positioning is prompting institutions to consider how their actions will affect customer choices over the long term.
Among the conclusions:
The pandemic tested the industry’s infrastructure in new ways.
Despite having dealt with the September 11th attacks, Hurricane Sandy and other disruptive events, RBC Capital Markets found that COVID-19 stretched internal resources to an unprecedented level as it prepared to carry out all functions remotely. From work-from-home infrastructure, collaboration capabilities, and permissions, the pandemic was uncharted territory for a large, long-established institution.
“I was worrying about what kind of WiFi people had in their homes,” said Kim Prado, global head of client, banking and digital channels technology at RBC Capital Markets. “You would be amazed at how many business people have horrible infrastructure in their houses. We were sending routers and setting up extra WiFi.”
Compatibility with client video conference software and permissions for remote screen sharing and printing were challenges that needed to be addressed in short order. Over the longer term, RBC Capital Markets is expecting a higher rate of virtual client interactions mirroring retail banking, including enhanced mobile interactions.
Institutions need to do their homework to ensure they meet customers where they are.
Consumers crave transparency and trust, especially in times of crisis.
“Our research showed that consumers are still unhappy,” said Harit Talwar, partner and global head of Goldman Sachs’ consumer business. “They don't know the interest that they earn on their savings and the interest which they pay on credit cards. They are fearful of the concept of money.”
Sensing an opportunity, Marcus by Goldman Sachs developed a digital product suite centered around insights, transparent fees and financial empowerment. Talwar pointed to its research that suggested more than a quarter of consumers won’t want to visit branches even when it’s safe to do so.
Brands tweaked product offerings in response to COVID-19 and associated economic circumstances.
Despite economic pressures and organizational changes, LendUp needed to consider how to continue to be a last-mile lender for its customers who often lack a financial cushion, said Shultes. In response, the company pulled back on loan amounts and durations.
Meanwhile, Marcus by Goldman Sachs was able to roll out customer assistance plans (payment deferments at no cost to the customer) shortly after the pandemic struck. Talwar explained that the company’s internal tech expertise helped it move quickly in meeting this important consumer need.
“The real story is not the customer assistance plan; the real story is how we went about it,” said Talwar. “From the time we decided that we would do it to the time we rolled it out, it was less than 72 hours, because this is what digital online agile technology stacks allow you to do.”
For JPMorgan’s treasury teams, a client-centric approach included a focus on safeguarding the core (including accounts and cash flow), ensuring ongoing business operations for clients and continued digital transformation efforts to ensure resilience over time. Thanks to work the bank already had in progress, JPMorgan was able to offer clients real-time access to data via APIs, noted Paul Margarites, executive director of TS Innovation and fintech engagement lead at JPMorgan.
Meanwhile, Fifth Third Bank and challenger bank Dave strived to connect customers with job opportunities. To meet these demands from customers, Fifth Third entered into a partnership with gig work platform Steady, while a couple of weeks into the pandemic, Dave saw activity on its remote job-finding platform Side Hustle spike, with more than 600% growth in customer applications for job opportunities.
Flexible deployment of human capital was a key enabler of the rollout of PPP loans.
Fifth Third Bank, Radius Bank, Intuit and others needed to rethink their resource allocations internally to respond to the demands of the Paycheck Protection Program.
“We upskilled and redeployed hundreds of employees to help where it was needed,” said Ben Hoffman, senior vice president, head of fintech and co-head of strategy at Fifth Third Bank. “There's so many people who are the unsung heroes here who just mobilized en masse, to make sure that we could get the PPP loans done right without adding material headcount.”
At Radius Bank, internal realignment around PPP goals was essential for success. It involved some redirection of efforts away from day-to-day activities toward the PPP process, leveraging a cross-functional team that included a small number of temporary workers.
“The gentleman who leads our SBA business led the project, and then we combined him with our technology shop who were building the virtual platforms,” said Mike Butler, CEO of Radius Bank. “We brought in our fintech partners like Treasury Prime, and within a week, we had an application stood up to deal with the first round of applications.”
There’s no such thing as too much communication.
Card issuing and processing startup Marqeta noted that the pandemic brought new pressure to ensure business continuity plans were sufficiently robust. The company would need to communicate more frequently among its internal team and with clients. As for Marqeta’s internal team communications, the company organized regular virtual meetings with staff members, and a weekly business email offered details about the health of the business, with updates on both positive and negative aspects of the company’s performance and outlook.
“What we really wanted to do was not be that management team that said, ‘Oh, don't worry, everything's going to be fine,’ because I don't think that would resonate with our team, and I don't think it had that air of authenticity,” said Omri Dahan, Marqeta’s chief revenue officer.
Transparency of communication ultimately brought team members closer together, he added.
Physical locations will be back, but they will look different.
Participants agreed that digital adoption, which picked up steam in recent years, accelerated during the pandemic. The new normal of digital-first financial services means institutions have opportunities to improve digital onboarding experiences and reduce account application abandonment rates, noted Nathaniel Harley, CEO of Mantl. Despite the momentum toward digital, however, he acknowledged that branches will likely still have a place.
“I definitely don’t think branches are going away, but they are certainly evolving and I think the technology within branches is going to change over time,” he said.
Post-COVID-19, the physical appearance and design of the bank branch is undergoing an extensive revamp, noted Scott Spector, a principal at design firm Spectorgroup.
While the early stages of the pandemic resulted in quick-fix design solutions from banks, over the long term, branch designs have to stand the test of time and reassure customers of their safety in physical branch spaces.
“You're seeing a lot of knee-jerk short term design both in signage and plexiglass panels like you're walking into a 7-Eleven, and those things just don't maintain durability,” said Spector.
By contrast, the new bank branch will likely be smaller and will prioritize wayfinding and better air circulation. It will also be set up to minimize the amount of shared surfaces, a context that will likely push activity away from cash in favor of contactless, digital payments.
“We're designing new buildings as we speak,” said Spector. “We have changed the priority from amenity to wellness. We've brought in behavioral psychologists, and we've spoken to infectious disease doctors [to inform next-generation design concepts].”