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Pandemic Changes in Banking to Continue

Some of the changes banks have instituted are likely to continue post-pandemic

By Deborah Jeanne Sergeant

Stephen Fournier of KeyBank: “The savings rate has gone through the roof.”
Stephen Fournier of KeyBank: “The savings rate has gone through the roof.”

Perhaps your company has grown to rely on remote deposits more during the pandemic than ever before.

If that’s your case, you’re not alone.

The growth of online banking has surged during the pandemic and local experts think that trend will continue, even though lobbies have long since opened.

The pandemic has also influenced other banking trends, like consolidation.

“In the last 14 months, and even before coming into the pandemic, clients have wanted banking options to include the ATM, their phone and online,” said Steve Fournier, CNY market president and retail leader for KeyBank.

To meet the demand for more efficient digital banking, KeyBank instituted a one-time passcode.

“What we found is a lot of times, people want a text message to their phones to get access rather than a security question,” Fournier said.

That saves time over accessing accounts through email confirmation.

“Some of this was an evolution with more people interested in banking remotely,” Fournier said.

Timothy Brown, business banking leader for the CNY and Rochester markets at KeyBank, said that remote deposit capture has grown dramatically.

“Business owners realize the tools they have like remote deposit capture and our online banking platform that they don’t always have to go into the bank,” Brown said.

Initially, KeyBank temporarily raised the maximum amount permitted for remote deposit capture. As the pandemic continued, the bank made the change permanent.

Tom Roman of NBTBank: “[Online banking] isn’t a replacement for relationship banking.”
Tom Roman of NBTBank: “[Online banking] isn’t a replacement for relationship banking.”

“Online features can free their staff up to work on other things at the business. But we always do have the availability for branch personnel so if a business owner wants to go into the branch they can and we can provide the business owner with a small business financial review while they’re there. They can see where their business is and we talk about where they want to go and make recommendations,” Brown said.

As another pandemic trend, Brown has noticed that attempts to perpetrate fraud have increased, prompting financial institutions to ramp up their fraud protection efforts.

“Our clients on the business side and personal side have become more in tune with fraud protection,” Brown said. “They’re asking how we can safeguard their business.”

Fournier has also observed that banking customers are more attuned to their financial concerns than at any other time. “The savings rate has gone through the roof. There’s been more focus on financial wellness,” he said.

That has prompted more banking customers asking to speak with bank representatives on their financial matters.

As with other businesses, banks have had to pivot and adjust with the times. Similar to retail stores, banks have experienced fewer in-person visits in favor of online interactions with customers. Like other banks, KeyBank has pared back its branches or relocated them to reflect shifts in consumer preferences.

“In the ‘80s, we saw people flee to the suburbs,” Fournier said. “Now folks are coming back to the city. How do we reposition an efficient franchise? We want to be close to where people are doing transactions. We still recognize people will still visit the branch.”

The interest in online banking has spurred Key to launch Laurel Road, a digital bank targeting medical and dental professionals.

Despite these advances, banks are not ready to automate everything.

“We’ve still given options to have a human connection, like virtual meetings with clients to go through their financial wellness during the pandemic,” Fournier said. “It could be a simple conversation or talking about how to navigate to get their restaurant open with online transactions.”

The KeyBank 2020 Financial Resiliency Survey released in February 2021 shows that 85% of Americans say they will use digital tools to conduct some or all their financial transactions after the pandemic. A surprise of the study was that more than one in four younger adults—millennials and Gen Z—prefer to use both in-person and digital banking. That trend may reflect the “financial firsts” this age range is experiencing during these unprecedented times.

The survey also showed that 41% of respondents are spending less and saving more since before the pandemic.

Money Concern

Jim Dowd of Pathfinder Bank:  “People are a little more concerned about their money.”
Jim Dowd of Pathfinder Bank: “People are a little more concerned about their money.”

Growing interest in improving financial security is a trend observed by Jim Dowd, chief operating officer at Pathfinder Bank.

“People are a little more concerned about their money,” Dowd said. “The economic incentives have caused an increase of deposits. Some chose to withdraw the cash and spend and others choose to save it. Deposits continue to grow at a rapid pace. Consumers are being more conservative.”

The pandemic has also affected short-term interest of savings vehicles like CDs and money market accounts. Dowd said that some people earned 2% pre-pandemic and now see around .4% to .5%.

But the lower current loan interest rates compared with February 2020 have made borrowing more enticing to consumers.

As with the other banks, Pathfinder has experienced “a dramatic increase in internet and mobile banking and even our drive-through,” Dowd said.

He believes that the customer experience interacting with Pathfinder’s decision makers is one of the distinctions that sets the bank apart. However, Pathfinder is working to find ways to demonstrate customer service, such as upgrading the remote and mobile banking platform.

While area banks have relied upon virtual banking, they would agree that in-person banking is here to stay.

“As we collectively continue to navigate the impacts of the pandemic, we’re taking stock of what we learned from the shift to virtual and maintaining those processes that added convenience and flexibility for our customers,” said Tom Roman, senior commercial banking relationship manager at NBT Bank. “It’s important to note that digital banking isn’t a replacement for relationship banking, but rather a tool that helps complement our services as we continue to help our communities recover economically.”