The month that passed and the months yet to come

The last month was the single most difficult month for our country – and industry – during my lifetime.  Unprecedented shutdowns, thousands of people sick and dying, and a standstill economy.  Our financial system was strong; we were a well-capitalized industry with excellent credit metrics, well-underwritten loans which incorporated many of the 2008 crisis lessons.  Everything changed overnight:  the economy shut down, people were getting sick, unemployment skyrocketed and sound credits instantly became imperiled.

Banks had to respond by changing how they do business on numerous levels.  It was time for the banks to step up.

First and foremost, their traditional distribution system was no longer acceptable.  As stores closed and social distancing became the mandate, banks could not keep their lobbies open.  Yet, as an essential service, they could not close their doors altogether.  They had to adapt by closing some branches, rotating the workforce, and making much greater use of the drive-through facilities. 

On the commercial side, no site-visits were possible, nor golf outings, client conferences and even basic document signing and deal closing. 

Similarly, wealth clients who were accustomed to visits from the wealth advisors had to deal with their plummeting stock portfolio value through email and phone calls.

All these required a sea-change in how we do business.  Banks frowned upon Work-from-home (WFH).  In our HR groups the topics was brought up repeatedly, with many concerns about employee engagement and productivity, emotional support, data integrity, technological challenges and numerous other challenges.  InfoSec experts, regulators, vendors and others told us we can’t do business remotely within our current core systems and technology environment.  Much will have to change to enable such flexibility, they said.  Many where questioning the safety of cloud storage, e-signature and other basic WFH requirements.

Literally overnight, necessity took over.  Banks’ technology departments, unsung heroes that they are, started writing routines and installing tools to facilitate WFH for a great percentage of employees.  Operations staff reconfigured processes to enable WFH.  Call center bankers learned how to operate remotely.  Drive-through bankers learned how to do ACH.  This, and countless other innovations, were all developed within days to respond to this national emergency and continue the operation and integrity of our precious financial system.

There were so many decisions to be made, from how many hours of pandemic leave do we give people to who is going to open the mail when the main office is closed.  These decisions were made with courage and thoughtfulness, looking to care for our employees while comforting and servicing our customers.  Patterns began to emerge early, followed by many midcourse corrections along the way and small adjustments as the situation evolved.  Executive teams across the industry rose to the occasion and made tough decisions, using trial-and-error to handle first-time situations.  If I didn’t know any better, I’d call this a systemic shift toward agility.

Most bank employees were ready to take the WFH challenge.  They didn’t realize – and neither did their supervisors – how challenging it is to do the most mundane tasks when you have small kids at home.  It’s like sitting on a keg of gunpowder wondering when it’s going to explode.  The explosion is inevitable, and timing can’t be fully controlled.  It’s very stressful.  Add to the mix new equipment, a partner who has their own issues, the general environmental stresses of the situation, and the challenge becomes enormous.  Most of our employees want to do the right thing, and they rose to the occasion.  We should not forget how hard it is to do what they’re doing now, day in and day out, for the good of the country as well as their own future.

And then the government responded with a bi-partisan agreement to inject much-needed capital into the economy, focused primarily on small business, with the intent of funding payrolls for a period deemed long enough for small businesses to keep their employees until the crisis abates.  It was a necessary move.  The issue for the government was, how do we get these much-needed funds into the hands of the business owners?  And that’s when the banking system became a giant disbursement tool for the SBA and the US government.

No one was quite clear what that meant, until that fateful Saturday, armed with sketchy guidance from the authorities, that banks – mostly community banks – started accepting applications from the business community.  The deluge was instantaneous and unmistakable.  One typical example:  a bank that typically processed 7,000 loan applications a year received 15,000 in that first week.  No one could have been prepared for this, and no one was: no bank nor the SBA.  The chaos has been indescribable.  Some banks opted or an “All hands on deck” solution, mobilizing hundreds of unskilled bank employees (unskilled in processing loan applications), training them on the fly and throwing them at thousands of incomplete, haphazardly put together loan applications.  Yet, each loan may represent the difference between bankruptcy and on-going concern, or how many employees need to be let go.  These are life-level decisions that came at a perfect storm moment. 

The industry’s response has been admirable.  I know you don’t get a group of neighbors applauding you when you return from an 18 hour day processing loans at an almost-empty operations center, but they should.  You are helping American hunker down and weather the storm while reducing the storm’s permanent damage to ourselves, our businesses and our economy.  The health care heroes amongst us save our lives; you help save their economic future and financial health.  It may sound grandiose – but it is no exaggeration.

So, in the midst of these dark times, I’m seeing silver linings and bright spots:

• Agility.  We have learned to do things faster, with fewer resources.  We have learned to make fast decisions and correct them numerous times as we learn more and know more.  We are only at the beginning of this journey, but this trauma forced us all to become more agile and reconsider many a sacred cow.  It’ll serve us well in the future.
  
  
• Customer communication.  It’s always important to communicate with customers, but never more than today.  We have access capacity in some businesses, which some banks are using to call customers and simply ask after their health and daily life, offering help but not selling.  Our people are calling, texting and emailing to inform customers of the PPP process, where their loan is in the system, or simply to hold their hand.  Some banks are expanding their digital offerings with special emphasis on humanizing their bankers digitally.  It’s a trend that should continue.
  
  
• Workforce sensitivity.  These times taught us that our employees are strong, resilient and creative.  It also is teaching out how fragile the human spirit is, and how difficult it is to handle adversity.  All to often it is the small stuff that breaks the camel’s back.  We can’t do enough for our employees during this time, as they rise to the occasion and do whatever it takes to get the job done.

Much more can be written, but I’ll stop here.  My deepest personal thanks to each and every one of you for what you’re doing to help our country, your community and the American people get through this.