America’s banks are needed, and they’re stepping up to help
The spread of the coronavirus has created perhaps the most complex and challenging global crisis in our lifetimes. Our day-to-day lives are uncertain and unsettled, and the situation is changing at lightning speed.
A crisis often brings people together in a common cause and we’re seeing that now, even if that coming together is done at an appropriate social distance. This doesn’t mean that everyone agrees on every facet of the COVID-19 response, but we all are trying to figure out how to do something to help, be it in a large or small way.
Now that the federal government has approved a $2 trillion stimulus package to help stabilize a U.S. economy reeling from COVID-19 fears, the priority is to get the money in the hands of millions of families and businesses. And just as we count on our health care experts to care for those suffering and on our scientists to work toward a vaccine, we count on the banks to support the financial needs of individuals, businesses and communities, just as they always do.
There are five key reasons why the banking industry – banks, credit unions and fintech lenders – is having major impact during the COVID-19 pandemic:
- Strong distribution capabilities: The banking industry has an expansive distribution network that is built on a blending of physical branch locations with extensive digital channels, including online and mobile banking capabilities. This positions them to support any distribution and servicing of funds needed to keep the economy going across our entire country. People know it, trust it and use it.
- Flexibility for consumers: Banks and credit unions across the country have already made changes that protect customers and employees while supporting social distancing and stay-at-home directives. Industry executives have collaborated to share ideas on how to make adjustments in branch hours and access, employee cross-training, customer communication, use of call centers and ATMs, and expansion of online and mobile banking capabilities. There are new policies for customers who have or are caring for family members with COVID-19, and changes are being implemented for people who have experienced job loss or reduced hours due to the pandemic response. These changes enable borrowers to preserve cash by deferring payments on mortgages and other existing loans, some for as long as 120 days. Late payment penalties are being waived, as are overdraft fees and ATM surcharges.
- Relationships with business customers: Banks are critical in the efforts to support businesses, small and large. They are well-equipped to support the lending needs of the business community, whatever it takes. They have existing relationships with their customers and are prepared in terms of liquidity, risk management and operational execution. The banking industry will be at the center of the effort to quickly mobilize the lending benefits of the government’s stimulus package.
- Financial support for communities: Whether they are in large cities, suburbs or rural areas, banks and credit unions actively provide funding to support their communities. They are collectively donating hundreds of millions of dollars for many different organizations providing support for small business assistance, public health, first responders, housing, food banks and other pressing needs. And through the not-for-profit National Foundation for Credit Counseling, they are providing additional support for financial counseling services to help consumers understand their options during these trying times.
- The banking industry is strong: As we monitor the volatility of today’s financial markets, it’s no surprise that there are many comparisons to the global financial crisis, whose darkest days were a dozen years ago. The U.S. banking sector is considerably stronger than it was then, with banks being well-capitalized and positioned to provide all types of financial services to consumers and businesses, while giving their customers easy access to their services with drive-thru branches, work-at-home customer service operations and expanded online and mobile banking capabilities. The 2008 crisis was very different than where we are today.
At BAI, we always work closely with financial services leaders, whether in business-as-usual circumstances or in times of crisis. Each week, new key issues are emerging and bankers are continuing to collaborate to share their experiences and what they have learned. They are also demonstrating new levels of innovation and creativity to solve new problems to help their customers.
There is so much uncertainty in today’s environment, but what’s not uncertain is the role of the banking sector in all of this – in important ways, they will make a difference in helping us all get through the challenges ahead.