Pandemic shows that people are banks’ most vital asset

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It’s a safe bet that 2020 will go down as one of the most memorable years of most bankers’ careers.

In the future, we’ll reflect on the time that the economy went from full throttle to a halt in a matter of weeks.

Hopefully, when the history books are written, authors will take a moment to acknowledge the fact that bankers were some of the most important immediate responders to a crisis few saw coming or even imagined possible.

Months later — and with sizable portions of the country still in a very restricted business environment — banks continue to help small businesses and individuals survive the economic storm.

Bankers themselves have faced extraordinary challenges in the midst of economic and later, social disruption. In a time when so many customers require increased assistance and seek personal interaction with their bank, most banks’ primary business channels faced unforeseen constraints and restrictions.

An executive manager friend at a large regional bank described it as trying to help customers save their businesses while simultaneously having to remodel their own.

During this time, much of our industry’s workforce had been displaced and/or forced to adapt to either work-from-home arrangements or very restrictive environments in branches and offices.

The debates have continued for some time about which actions worked earlier this year, which didn’t, which business-model adaptations may last and which will quickly be put behind us.

Whether 2020 turns out to be the “year that changed everything” remains to be seen. Individuals who were previously selling the idea that the banking industry was a transformation laggard over the past decade are beating their drum anew.

Instead, this pandemic has shown just how adaptive and flexible the banking industry actually is. While there will always be examples of individual organizations being caught flat-footed from time to time, the industry has been incredibly adaptive and responsive.

For one, it’s very telling that a vast majority of banks already had the technology and flexible personnel in place to handle a sudden and unforeseen disruption. Banks didn’t have to haphazardly acquire new technology to deal with a sudden (forced) shift in branch usage.

Many of the pundits who mistakenly considered banks to be technology deniers and Luddites, are now assuring us that this disruption will mark the beginning of the end of the traditional bank-branching model. For real this time!

Yet, July was the first month in nine years in which the banking industry opened more branches than it closed.

To be sure, there are branch closures to come. Several large banks have announced planned closures of branches in coming months. Most of these plans, however, predated the pandemic.

What is important to note is that few, if any, of these cases involve a bank closing all (or even most) branches in markets. Branches with less efficient layouts are being reformatted or replaced.

Concurrently, the expanded service area of individual branches creates coverage overlaps, and makes the phasing-out of older and/or less efficient facilities possible.

Meanwhile, community bankers appear to be as committed to their branches as ever. In a world of online behemoths, their branches distinguish and largely define them.

Bankers’ continued commitment to their branches has little to do with nostalgia or resistance to change. Branches remain important to bankers because branches remain important and relevant to customers.

In a technology-driven world in which customers have more banking options than any time in history, a bank’s physical presence in its markets becomes more important, not less.

Sure, banks may not need as many branches as were once called for to process basic paper transactions, but accessible physical branches are still the second greatest differentiator in most markets. The first greatest differentiator is what’s housed in these branches.

If this year has shown anything, it’s that the talents, adaptability and resilience of bankers are still the lifeblood of the industry.

Even a “transformative” year has not changed that.

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