The coronavirus outbreak has many uncertainties, including when the pandemic will be over. But one certainty is that it will permanently change the way many people do their banking business.
“People have had to become a lot more comfortable with mobile apps as opposed to physically interacting with a teller,” said Gary Head, chairman and CEO of Signature Bank in Fayetteville.
In the past, banks were popular places for social interaction. Many older customers enjoyed coming to banks and visiting with tellers and loan officers. Younger people were more likely to do mobile banking.
But Head said the fact that people more than 65 years old are more vulnerable to serious complications from the virus means they have quickly learned to use mobile applications.
“You don’t want to put life at risk to get something done,” Head said. “And the technology has become so much easier. More people have availed themselves of it than ever in the past. An increasing number of customers are banking and paying bills online and shopping online.”
Even when things get back to some semblance of normalcy, Head thinks the trend to bank online will remain. He also expects people will continue with habits such as frequent handwashing and taking vitamin supplements.
“People are being more careful about all the things they do,” Head said. “There have always been germs. You don’t escape getting a cold or flu without some precautions. But with people being more careful, I don’t think people are going to get sick as often. I doubt anyone will forget this for a long while.”
Bankers have also had to learn how to do things differently. Like most banks, Signature Bank lobbies were closed during the height of the pandemic. Loan officers have been working from home.
“We have learned to do a lot of things that probably were not even available from a technology standpoint five years ago,” Head said. “Technology is moving at such a fast pace that most people can’t even recognize it.”
While some people are very fearful of the coronavirus, others aren’t. Some who aren’t have even postulated that the virus is not that harmful and instead is being used to make the world cashless.
“Removing cash from society takes all monetary power away from citizens while giving it to central banks,” states one popular conspiracy-theory website.
Head doubts the world will go completely cashless.
“Some things will still have to be paid for with dollar bills,” he said. “Not everywhere in the country is technology available to even use a card.”
But he does expect technology such as remote-capture machines for deposits and smartphones being used to pay for a transaction instead of using a credit card are likely to become more popular depending on consumer demand.
“People have learned to appreciate speed and efficiency because of what they have had to learn to do because of this crisis,” Head said. “There will still be people who want to come to the bank to do some business, but I think it is going to be a much lower number after this is over, maybe forever.”
There has been a lot of conversation around whether people could lose their banks as was seen in the Great Depression. Are we in the Great COVID Depression? But Head points out while some banks closed during the Great Recession in 2008, because of federal deposit insurance, no customers lost their deposits.
He doesn’t see any banks in Arkansas failing.
“We have strong banks in Arkansas,” Head said. “They were in the best shape ever going into this pandemic.”
Arkansas State Banking Commissioner Candace Franks agrees that banking institutions in the state are sound and well-positioned to weather the pandemic storm.
“Our Arkansas banks, as well as the general banking industry throughout the nation, are in very sound condition going into this economic downturn caused by the pandemic,” Franks said. “I believe this will be beneficial in our recovery from this event.”
Some large national banks have tightened their mortgage-lending practices requiring higher credit scores and larger down payments than in the past. Franks said Arkansas banks will continue to offer loans.
“Banks are traditionally in the business of loaning money,” Franks said. “That is one of the fundamentals of banking. Our banks will continue to offer loan services to customers, and I know our Arkansas banks are presently working closely with customers who have found themselves in difficult circumstances due to the economic fallout from this pandemic.”
Franks said traditional banks and branch locations are working on plans to reopen their lobbies to customers and employees with plans to keep everyone safe.
“Of course, that is a hopeful sign because community banks like we have in Arkansas do have very personal relationships with their customers,” Franks said. “Opening bank lobbies to customers and employees wearing masks for health protection is a new challenge for our banks since wearing a mask into a banking setting has not been a welcomed activity in the past. So, these are additional challenges facing this industry in interacting with customers.”
Franks does expect the pandemic will result in permanent changes to how people bank including an increase in use of online banking services.
“There has been a definite trend in those areas prior to this crisis, and I believe that experience indicates that the events of the pandemic will continue and, in fact, speed up the use of online and remote services,” Franks said. “After the disruption in the banking-industry payments systems after the 9/11 events, there was a much faster adoption of how payments systems worked and processed. They were slowly changing and evolving before 9/11; that event just sped it all up in response to the disruption. I think you may see a similar evolution here.”
People have been advised to use hand sanitizer, wash their hands frequently and wear gloves. But they still may have to touch a machine used by many others to put in the PIN or use a common pen to sign credit-card vouchers. Franks said she expects touch-free payments will become more popular in response to his pandemic as customers will be more aware and focused on “touch” surfaces as they transact payments.