How to weather this economic storm — and the next

Zviki Ben Ishay

We’re in the midst of an economic downturn characterized by inflation and ballooning interest rates. Geopolitical instability is the new normal. In this challenging environment, community banks have an opportunity to prepare for any shocks and aftershocks on the horizon. In the process, they’ll come out stronger than ever before. Based on my conversations with community bank leaders, here are four tested tips to weather the storm and build future-ready processes. 

Keep Investing in Technology

Despite economic uncertainty and budgetary pressure, now is the time to keep investing in technology that brings a tangible ROI. According to one estimate, U.S. banks’ investment in technology will increase by 10.6 percent year over year in 2022.

Banks around the world are pouring effort and money into a digital transformation, they have been doing so for a while now, and they aren’t about to slow down. And this isn’t just the domain of big banks: regional banks, community banks, credit unions and neobanks as a group will make up 48.5 percent of total U.S. bank tech spending by 2024.

For community banks that want to increase their customer satisfaction and boost efficiencies, a customer-facing frontend is a must. By going beyond the standard mobile app and offering truly innovative tools, such as text message-based eSignature, remote ID verification, and chatbots that customers will actually love, community banks can position themselves as a pioneer. 

Remember that while community banks aren’t sitting on the same technology budget as big national banks, they have a secret advantage: Fewer departments and less red tape means an ability to adopt new technology faster. 

Be a Flexible Lender

Community banks are responsible for more than half of all small business loans in the United States. They also make more than 80 percent of all agricultural loans. Given that all sectors are feeling the pressure of inflation and higher interest rates, now would be a good time to be especially flexible with rates. This is already an area where community banks beat big banks, so take advantage of this strength. Advertising better interest rates will help attract small businesses and individuals who might otherwise postpone taking out a loan. And the community bank just may win a customer for life. 

Maintain a Human Touch

Particularly during times of turmoil, customers want to feel like there is a human being in their court. They crave reassurance and availability. Tune into this need and step up efforts to proactively reach out to customers, and probe deeper during engagements to find out how else the bank can be of service. If possible, expand hours of availability, especially at the call center. And ensure that customers can complete forms, send documents, and complete other tasks while an agent guides them through it, whether by phone, video chat, or in-person. 

Keep Employees Happy

Customer-facing employees are prone to burnout. This may be even more true during an economic crisis, when the emotional and mental load of interacting with stressed-out customers is greater. Consider regular employee engagement surveys to keep the finger on the pulse of how they’re feeling. Promote a culture of care, where employees feel safe to bring up concerns and contribute ideas. Adopting customer-facing technology (see No. 1) is also a great way to prevent burnout since agents spend less time on rework, chasing customers for information, and filing paperwork when they can access a streamlined platform.

The Bottom Line

Community banks already boast the advantages of less red tape, greater ability to offer flexible lending terms, a more human approach towards customers, and a homey atmosphere for employees. By strengthening these strengths, community banks will not just weather this storm (and the next), but also thrive in it.

 

Zviki Ben Ishay is the CEO and cofounder of Lightico, a SaaS platform that empowers businesses to accelerate their customer journeys through automated workflows for finance, insurance and other B2C businesses.