Banking on Change

Three local bank presidents weigh in on COVID-19’s effects on the lending environment and industry as a whole.

Perspective Banking

The pandemic accelerated trends that were already going on. Banks are doing more business online, less in branches, and there are fewer new business loans because of all the uncertainty.  – Guy Williams, president and CEO of Gulf Coast Bank

Needless to say, financial organizations have not had the year they were expecting.
“​The pandemic has changed everything, and banking is no exception,” said b1BANK Market President Christopher Keene.

Banks have had to manage the Paycheck Protection Program lending process, move most of their customer service online, protect their own employees, and most importantly, pivot to serve businesses and individuals experiencing financial distress as a result of the disruption caused by COVID-19.

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“The pandemic accelerated trends that were already going on,” said Guy Williams, president and CEO of Gulf Coast Bank. “Banks are doing more business online, less in branches, and there are fewer new business loans because of all the uncertainty. We are a tourist- and oil-dependent economy, so it would be hard to open a business related to entertainment, hospitality, food service or energy right now. On the other hand, there’s high demand for home improvement, pools, motorhomes and boats, so related businesses would be well received.”

Fidelity Bank President and CEO Chris Ferris said the biggest change is how online banking has moved front and center.

“The pandemic exposed what I would call some mid-to-late adopters to digital services like online banking, mobile banking, bill pay, remote check deposit and personal payment systems,” he said. “I highly suspect that the uptick in use we are experiencing right now will continue in the future. Banks will need to commit to staying abreast of digital trends.”

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Ferris said the technological awakening applies to the bankers themselves, who have become more comfortable with digital tools such as Zoom and Microsoft Teams.

“I suspect even after the crisis is over, virtual meetings will be accepted if not encouraged. Also, electronic forms acceptance will become more mainstream. The need to physically sign paper is likely to decrease on many documents.”

Doing Business Face to Face (or Mask to Mask?)

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Williams said branches are “important, but not as important as they used to be, so we’re not planning to open any new ones in the foreseeable future.” However, Williams and his fellow bank presidents all agree that customers will continue to come into brick-and-mortar branches to solve problems and open new accounts.

Ferris said that business customers, especially those in retail services, still have a need to visit branches to complete cash transactions, such as getting change and depositing coins.

“However, my belief is that branches will continue to see a decline in transactional business,” he said. “Instead, clients will visit them when they have more complex needs and need consultative advice or for problem resolution. This likely means the skillset of the associates in the branches will evolve.

“The current crisis and scramble for PPP loans taught business clients that they should know their banker and have a relationship with that banker. A branch will still be a safe, secure and professional space to conduct business and to have discussions about more complex needs and initiatives.”

Keene, with b1BANK, agrees that relationships are what will bring customers into physical branches.

“We have the same digital technology that all of the bigger banks do, and the majority of our customers use it for day-to-day banking transactions,” he said. “But they know if they need us, they can come down to a local banking center and work with a banker. We take pride in the relationships we have built in the community and our branches are where those relationships develop.”

My belief is that branches will continue to see a decline in transactional business. Instead, clients will visit them when they have more complex needs and need consultative advice or for problem resolution. This likely means the skillset of the associates in the branches will evolve. – Chris Ferris, president and CEO of Fidelity Bank

New Needs

Without a doubt, customers’ priorities have changed during the pandemic and banks are pivoting to take care of them. Williams said that since there is now a greater need for financial planning, Gulf Coast has dedicated more people to that service.

Keene, meanwhile, said his teams have developed programs with multiple options to help clients experiencing financial hardship.

“We were proactive in helping customers apply for Paycheck Protection Program loans and will be participating in the Main Street program,” he said. “Our bankers will continue to help our clients analyze their current financial situation and make recommendations … to ensure they reach their long-term goals.”

Said Ferris: “Our clients are all having their own unique experience so while we have implemented some blanket actions like waiving late fees and suspending payments, we are looking at each client individually and using our consultative approach to assist in their needs. That may be working out payments, restructuring or in many cases assisting and planning what opportunity comes next.

Low Rates and Lower Yields

The low interest rates of 2020 have been great for anyone looking to refinance their mortgage or other debt, but they’re making it harder for bank customers to make money on the money they’ve saved or invested.

“Unfortunately, low interest rates are here for a while,” said Williams. “Safety is important. We encourage folks not to chase yield in a down market. No one likes less yield, but it is better to broadly diversify investments and accept a lower yield.”

Ferris agrees.

“The best advice I have is to talk to the professionals,” he said. “Turn to a certified financial planner who will look at many factors including your age, dreams for yourself and your family and most of all your risk tolerance. What is right for an unmarried 26-year-old beginning his or her career is not the same for an [older] individual dreaming of retirement. The younger an individual is when they begin a conversation about what they want their financial future to look like, the better prepared they will be.”

Silver Lining

As with many challenging situations, though, Keene said the pandemic is not without its silver linings.

“A positive for b1BANK has been the increase in one-on-one communication with our clients, strengthening relations,” he said. “Our bankers understand our clients’ businesses and long-term goals. We are navigating this pandemic together, with, in some instances, multiple conversations a day, to help our clients plan for immediate needs and continue to stay on track to attain those long-term goals. While we continue to use technology to make banking more convenient for our clients, it’s the partnerships we have strengthened that will continue past the pandemic.”

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