Emerging From COVID-19: Consumer and Financial Institution Perspectives
COVID-19 has had an immeasurable impact on our society – societally, technologically and most certainly economically.
During the first 13 weeks of the pandemic, there were 45.7 million initial claims for unemployment, or 3.5 million per week. To put this in perspective, during the Great Recession of 2007-2009, the average weekly total initial claims were 476,000, and the largest single week was 659,000.
It’s been four years since Raddon asserted in our study, Channels and Payments Insights: High-Touch and High-Tech Consumers Are the Norm, that “most consumers … are using electronic channels in addition to, rather than in lieu of, traditional banking channels.” Since then, our research repeatedly has confirmed that consumers like the option of multiple ways of doing business with their financial institutions.
Strategic Planning in a Post-Pandemic Environment (Part 2)
More than any year in generations, 2020 has brought a wave of uncertainty to the marketplace. But it has also spurred an innovative, thoughtful response from businesses across industries – especially financial services. As banks and credit unions take on the strategic planning process in this watershed year, they do so with a new vision toward customer and member service, branch management and even disaster recovery.
Strategic Planning in a Post-Pandemic Environment (Part 1)
As the foundation of the financial services industry, banks and credit unions must continue to manage day-to-day operations but also keep an eye toward the future, as the world feels its way through life during and after COVID-19. With the industry changing before our eyes, strategic planning in 2020 is even more critical to financial institutions.
By: Jan Trifts and Marcy Scanlin, Strategic Advisors
As the financial strain of shelter-in-place mandates wears on consumers, Raddon experts expect to see two divergent consumer deposit behaviors that financial institutions will need to address soon. First, some consumers will be looking for liquidity as they need immediate access to their money for living expenses. Second, some will be looking for longer-term options as a flight to safety as financial markets fluctuate.
COVID-19: The Future of Lending Can’t Get Here Soon Enough
The economic impact of civic shutdowns, business closures and layoffs in response to combating the novel coronavirus places local banks and credit unions at the center of helping to preserve, if not salvage, the financial well-being of their communities.
On March 22, financial industry regulators released an interagency statement encouraging financial institutions to help borrowers and giving leeway on risk classification requirements for certain loan modifications amid COVID-19.
The economic impact of COVID-19 becomes increasingly significant as the lockdown extends. In the past five weeks, 26.5 million people filed initial claims for unemployment. To put this into perspective, that is almost as many people as those filing for unemployment in all of 2018, 2019 and the first 11 weeks of 2020 combined – a total of 115 weeks.
How did we do in our industry predictions for 2019? Here are the predictions we offered up one year ago, along with an assessment of our foresight. Overall, our crystal ball was good, but with a few notable exceptions, which were due to the Federal Reserve’s reversal of its interest rate course.
It’s that time of year! Time to prepare for next year and to plan for the annual Raddon Conference, held in Chicago on November 4th to 6th. Given all the uncertainty about the economy and rate environment, we hope to shine a light on the way forward for you. Here are five big strategic questions for us to answer as we plan for 2020:
Marketers and product managers at financial institutions know that a product’s features and benefits can make or break that product. As a result, institutions spend significant time and energy measuring their products’ fit in the competitive landscape.
Raddon recently hit the road for a series of workshops with participants in our Performance Analytics program. We hosted sessions in 17 cities east of the Mississippi, meeting with over 500 financial services executives along the way. (Note: We’ll be visiting the western half of the country in June; registration is now open for those sessions.)
Every year, Raddon conducts nationwide research of consumers and small businesses to understand their motivations, preferences and behaviors in banking. We include our discoveries in four comprehensive reports: Deposit Insights, Lending Insights, Payments and Channels Insights and Small Business Insights. Subscribers to the Raddon Research Insights program receive these four studies as well as an invitation to a webinar giving highlights and strategic recommendations.
Many banks and credit unions rely on indirect vehicle lending as a sizeable component of their earning asset mix. However, pressure from a variety of sources should make institutions reconsider its role in that mix.
Another Raddon conference is in the books, and what an event it was! So many factors came together to make it exceptional – insightful keynote speakers, engaging breakout sessions, Raddon Rocket cocktails, reasonably good Chicago weather – that everyone involved had a blast.
If you didn’t make it this year, be sure to plan for next year’s event. In the meantime, here are seven key takeaways from the 2018 conference about the industry and the economy.
Millennials should be the best borrowers for banks and credit unions, yet student loans are crippling their ability to borrow. Andrew Vahrenkamp from Raddon walks through what financial institutions can do to help boost this crucial borrowing segment.
November 24 is Small Business Saturday, so now is a good time to recognize the vital force of small businesses for our nation’s economy. Defined by the Small Business Administration (SBA) as having fewer than 500 paid employees, U.S. small businesses employ almost half (48 percent) of the civilian population. These 5.9 million non-sole-proprietorships also are responsible for 41 cents of every dollar earned by American workers. In essence, 40 percent of consumer spending power is a function of small business employment.
From 2009 through 2015, anticipated loan demand was on the decline, bottoming out at 19 percent. Since then, the demand has increased sharply. In 2017, 28 percent of consumers reported they anticipated opening a new loan in the next 12 months. Although demand for loans was down slightly in 2018 to 24 percent, it will remain high in the next 12 months. Financial institutions just need to know where to look for it.
In June, Raddon hosted its quarterly workshops for participants in the Performance Analytics program. These workshops provide a forum for financial services executives, senior leadership, managers and department personnel to discuss the latest industry issues and assess their organization’s performance through the program’s peer benchmarks, trend analysis and customer segmentation schemes.
Free checking is dying. Banks are reducing their branch networks, with 93% of the closures occurring in zip codes with below-average incomes. Transitioning to digital channels is leaving those Americans without access to technology behind. As we noted last year,
I once heard someone say, big goals get big results, no goals get no results. I’m paraphrasing, but the essence of the statement has always stuck with me, especially when researching Raddon’s recent publication, Effectively Serving the Hispanic Market.
Raddon recently wrapped up another round of workshops for participants in our Performance Analytics program. More than 1500 financial services executives attend these sessions each year to collaborate with peers and discuss strategies to improve performance.
The financial press has been fairly outspoken about rising rates. Given the Fed’s persistence in raising the Fed Funds rate, we should expect this level of reporting, but has that concept filtered down to the American public?
Early in 2017 we compiled our predictions for the upcoming year. These were a mix of economic and industry predictions. How accurate were these predictions? As it turns out, we were mostly on the mark in our predictions, at least in terms of direction if not always in magnitude. Here is a review of our 2017 predictions and an assessment of the accuracy of each.
Declining overdraft income makes lower income households challenging to serve profitably. Andrew Vahrenkamp, Senior Research Analyst at Raddon, gives some ideas on how to serve these consumers effectively and efficiently.