COVID-19 is undeniably reshaping how we live and work.
Financial services companies may be better positioned than some other industries to weather this storm, but they – and the customers they serve – are nonetheless grappling with a variety of major shifts.
COVID-19 is not only impacting the way consumers and businesses interact with their financial services providers, but it is also impacting what they need from their financial services providers. For instance:
- More businesses are seeking small business loans in response to the stimulus package.
- More consumers need mobile banking solutions for items they previously would have visited for in-branch.
- Increasingly, employers need to find the best way to keep their employees updated about potentially changing benefits.
As the effects of the COVID-19 crisis continue to unfold, we’re seeing four themes emerge.
Here’s how financial services and insurance companies are responding to the crisis today:
1. Providing an empathetic approach to addressing customers’ rapidly evolving needs, even “from a distance”
Banks, credit card companies, and insurance providers are working to provide easy access to information in a time of high uncertainty.
Banks that have previously been leaders in offering online banking – like Capital One and PNC – have been encouraging customers now more than ever to service their banking needs online with digital tools and services by reminding them how to check balances, pay bills, and transfer money online. They have also been expanding systems to ensure that they are able to handle an increase in inbound digital servicing. And, where possible, companies are deploying additional digital tools, including options to request payment deferrals and online chat services to enable customers to avoid longer than usual hold times at call centers.
Financial services and insurance companies are also empowering call service representatives to take action and address customers’ concerns directly without additional approvals. To deploy these new working norms, companies are launching additional training for customer service representatives who are bombarded by anxious customers. The trainings are focused on leading with empathy while being empowered to offer additional forms of financial relief.
2. Finding new ways to guide customers through a time of crisis
Some financial services companies are helping customers address their evolving financial situations through either an increase in available information or planning tools that enable customers to better navigate their financial picture given the uncertainty of the crisis. Examples of this response include Vanguard holding live webcasts and using a dedicated section of their website to educate customers on how to navigate market volatility, and HSBC is using its financial expertise to help customers manage their emergency finances with access to an Emergency Savings Fund Calculator tool.
3. Providing direct financial relief to customers or easing the pressure of monthly payments
Financial institutions including American Express, Chase, Discover, and many others have reported offering financial assistance or deferring payments in order to address the evolving financial situation caused by COVID-19. Furthermore, most companies are offering additional forms of relief that may be made available to customers who reach out and explain how COVID-19 has personally affected their personal financial situation or has caused hardship for their business. Depending on the provider, forms of relief include:
- Waiving interest fees, late fees, or minimum payments for a period of time.
- Not reporting payment deferrals such as late payments to credit bureaus.
- Delaying due dates for some borrowers on cards, auto loans and mortgages.
- Increasing spending limits for certain cardholders on a case-by-case basis.
In addition to providing payment deferral options, the top ten sellers of personal car insurance have pledged to give back more than $7 billion in reduced premiums through programs like Allstate’s ‘Shelter-in-Place Payback’ and Statefarm’s ‘Good Neighbor Relief Program.’
4. Giving philanthropic donations to support organizations that are providing direct aid to addressing the crisis
Many financial services and insurance companies have also already provided philanthropic donations focused on addressing issues of hunger and food insecurity, or to provide direct relief to community development organizations where the majority of their employees are located. Beyond giving donations to local communities and to support basic needs, some financial services companies have also provided additional donations to support broader communities including Bank of America’s pledge to support an initiative with Khan Academy to offer free online learning for Pre-K – Grade 12 students throughout this crisis. While USAA has committed that a portion of its donations will be designated to non-profits focused specifically on helping members of the military.
In the medium-term, we expect to see financial services and insurance companies begin to launch preliminary, near-term strategic responses. Given the continuously evolving nature of this ongoing situation, longer-term strategies will emerge as the pandemic slows and economies emerge with a clearer view of the new current state.
For many companies, the near-term and long-term strategies will require an accelerated digital transformation in order to meet changing customer needs and experience expectations. Companies will need to build smarter, faster and more flexible organizations to create new business models that operate at the pace of ever-changing markets in order to build and sustain crucial brand relevance.
If you need help figuring out what path to take now, in the next 6-8 months, or beyond, please don’t hesitate to reach out. We’re happy to have a conversation. Also, if you have any questions you’d like answered by our experts, drop them into the comments below or reach out directly here.