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The coronavirus impact on community banks and credit unions: digital as a necessity

As the world continues to navigate the COVID-19 pandemic, financial institutions may be in a difficult position.

Because of the ongoing pandemic, some of these organizations may be struggling to connect with customers
Because of the ongoing pandemic, some of these organizations may be struggling to connect with customers

As the world continues to navigate the COVID-19 pandemic, financial institutions may be in a difficult position. Their customers require servicing, but an increasing number of physical locations are temporarily shutting their doors in an effort to reduce the spread of the virus. This is a challenge for all financial businesses, but community banks and credit unions are particularly affected as they often rely heavily on in-person interactions as a core part of their brands.

The challenge for financial institutions

Because of the ongoing pandemic, some of these organizations may be struggling to connect with customers and, as a result, may be unable to provide popular services since many interactions are now limited to a digital space. After all, one of the few general complaints about these financial institutions often relate to their lack of investment and emphasis on new technology compared to big banks.

The current dilemma for business banking customers who require international services – which could be a large segment – is that most small companies have a global component such as foreign vendors, customers and staff. Now these organizations are likely scrambling to manage their foreign currency exposure, product sourcing and more. These are major challenges and require knowledgeable and flexible partners. Is your financial institution able to help?

Serving business customers

Some smaller financial institutions have partnered with organizations like Western Union Business Solutions to offer a range of international services such as foreign currency payments. Through a white-labeled, mobile-friendly platform, credit unions and community banks can offer these products digitally and under their own branding.

Branches: more closures to come

The number of closed financial institutions is increasing swiftly. Still, some brands prefer to remain in regular operation, at least for now, to project a measure of stability. This strategy will likely change as more areas continue to shut down due to government instructions.

Even if  bank and credit union locations remain open, 82% of banking customers report concern over entering a branch and 63% are more inclined to try a digital option. The same survey reports that some banks are even winning new business because of their online capabilities.

If financial institutions are able to transition any services online, now is likely the time to take action, especially since more and more branches are announcing closures. It’s important to give customers an alternative option where possible to show your ability to meet their changing needs. If making adjustments cannot be made quickly, consider keeping your customer base informed of the progress. It could help keep them from switching to another provider.

Digital adoption rates

Prior to the outbreak, credit unions and community banks may have been concerned about levels of adoption for these types of online transactions, let alone mobile usage. After all, compared to other nations, North America has been slower to adopt financial services on a smartphone and yet because of concerns regarding public activities during the current pandemic,

Making a personal connection without being in person

It’s important to remember that shifting online doesn’t mean moving away from a personalized approach. In fact, experts argue that financial institutions should offer online capabilities because it reflects the new busy schedule of today’s customers. Consumers value convenience and the ability to manage their tasks quickly. Relationship building and unique connections can be made without a face-to-face interaction.

For instance, many businesses have been sending out email communication regarding their business continuity plans. However, according to a recent examination, a standard note is not enough. Customers may be worried about their financial stability  and seek more specific and practical advice from their financial institutions regarding closures, fees and instructions. Consider segmenting your audience and providing regular detailed updates to each separate group.

Final notes

COVID-19 has very quickly transformed the day-to-day lives of people around the world. Credit unions and community banks are understandably concerned about managing their businesses in the face of this uncertainty. Financial institutions with established digital infrastructures or platforms are able to continue supporting their customers, but those without such access may have trouble because of prolonged closures and the increased public appetite for online banking.

Adapting to a digital-first strategy does not have to be difficult or sacrifice the values of an organization. Financial institutions can apply their brand values to digital components and continue to successfully serve their customers.

It’s unclear when the pandemic will subside and regular business operations will resume. Until then, financial institutions should consider the evolving needs of their customer base.


About Western Union Business Solutions

Western Union Business Solutions enables companies of all sizes to send and receive cross-border payments and manage foreign exchange. With deep expertise in moving funds around the globe, access to over 130 currencies, and a global financial network spanning more than 200 countries and territories, we help companies spend less time managing international financial transactions and more time growing their businesses.
 
We have extensive experience working with clients in a variety of sectors, including import and export, wine and spirits, agriculture, mining, and non-profit. We also offer customized solutions for legal, financial and educational institutions.
 
Western Union Business Solutions is one of the world’s leading providers of cross-border business payments. Western Union Business Solutions operates through locally licensed affiliates in more than 30 countries.

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