Home Posts tagged lessons
Banking and Financial Services Special Coverage

Pandemic Lessons

Rich Kump

Rich Kump says the pandemic has forced people who had been reluctant to bank remotely to give it a shot.

It’s the wave of the future, Rich Kump said — and the COVID-19 pandemic simply cast that wave in sharper relief.

“We’ve had a goal of moving routine transactions out of the branch,” the president of UMassFive College Federal Credit Union told BusinessWest. “We’ve been educating our members for three years, trying to move them out of the branch, and there’s still a percentage of America who just likes to everything in person. You need to take a thoughtful approach; you can’t force people into it … although COVID did that, to some extent.”

A widely held vision of the bank (or credit union) branch of the future — one shared, to some degree, by other local banking leaders we spoke with — does indeed promote robust online and mobile tools for routine business like deposits and withdrawals, leaving less traffic in branches, but a greater percentage of that traffic given over to more complex or consultative matters.

“We’ve had a goal of moving routine transactions out of the branch.”

And many people who have long resisted online banking are singing a different tune, said Paul Scully, president of Country Bank.

“Customers, just because of the nature of the pandemic, with people staying at home, started exploring technology,” he noted. “An amazing number of people are using technology who, for a number of years, fought it.”

In most cases, it’s just a matter of breaking old habits, Scully said — “and old habits are comfortable habits. But I think people are becoming better acclimated to technology and getting over their fears. There are still people who think, ‘I have to go into the bank to make that transaction because what if the money doesn’t get there?’ But as an industry and as a bank, we’ve been able to alleviate the concerns some people have.”

Florence Bank President Kevin Day agreed.

“Banking in general is going to change. The stuff you need to do is the same, but how you’re going to do it will change,” he said, noting that lobby traffic has been declining for years, and what was already a high adoption rate of mobile tools only accelerated over the past three months as banks closed lobbies to most routine business. “People are starting to realize it’s probably more secure, so they’re getting more comfortable. It’s also way more convenient.”

And gaining momentum in these shuttered times.

“Customers realized they really can do all their banking online,” Scully said. “We’re no different than Macy’s or Amazon. You realize you can sit down with your laptop or phone and purchase something from a retail outlet, and you can also do your banking that way. People are becoming more comfortable with it — so we need to keep upgrading and enhancing it.”

That’s not all they’re doing. Banks and credit unions, despite a much higher reliance on drive-up lanes and mobile platforms lately, never really closed during the pandemic, and while they continued to serve customers — in some cases, helping them navigate sudden financial hardships — they were also learning lessons and conducting internal conversations about where the industry is heading and what the bank of the future should look like.

Some were discussions that had begun years ago but, again, were suddenly cast in sharp relief as the wave known as COVID-19 came crashing down.

Staying Connected

People have been starved for human contact, Kump said. He knows that from UMassFive’s call center, as calls over the past three months are 25% longer, on average, than last year.

“A lot of it is, people just want to talk,” he noted. “Yes, they call for a reason, but then they want to talk. It’s a bit of a community.”

Bolstering the call center was one of the success stories of late March, which he recalls as a tough time.

“I don’t think anyone was ultimately prepared for this; we were scambling,” he said, explaining that many retail personnel in the branches began covering the phones, often from home. “Within two weeks, 70% of our staff was working from home. That’s when the chaos evolved into routine.”

Like the other institutions we spoke with, UMassFive didn’t close completely, staying open by appointment for services that couldn’t be done remotely, from notary signings to certain loan closings to instant-issue debit cards. The week Kump spoke with BusinessWest, the credit union was operating a soft opening of sorts before announcing a shift to walk-in business.

“Financial wellness isn’t just for people with means; it’s everybody, from somebody with an entry-level job to someone doing college planning or estate planning.”

Day recalls a similar experience.

“In that first week, everything was shutting down, and people were saying, ‘you’re a bank. You can’t shut down,’” he said. But Florence transitioned to drive-up service where possible while witnessing an expansion of remote banking — as well as phone-call volume that was up 100% early on.

“We helped a lot of people transition to mobile and computer options. People have used the drive-ups. We opened the lobbies for people who needed to do something in person. We went out to cars in some cases,” he recalled. “You couldn’t come and go as you wanted, but we never really closed. If you called and the only way to do something was in person, we did it in person.”

Kevin Day

Kevin Day says shifting most employees to remote work was one of the smoother transitions necessitated by COVID-19.

Still, the sudden, in many ways forced expansion of remote banking is just an extension of where the industry was already headed, Day explained. “We had already seen trends toward online, mobile, people doing much more on their computers and phones. The pandemic just really accelerated that.”

Scully said the transition to employees working remotely was one of the easier shifts.

“It wasn’t that difficult for us. We had all the technology in place that allowed us to immediately have all our non-branch staff working remotely, literally overnight. So that fell into place nicely for us; we didn’t miss a beat. Business was never impacted.”

For example, he said Country processed about 450 Paycheck Protection Program (PPP) loans remotely, while Zoom calls and Webex meetings became the order of the day. It has worked so well, in fact, that non-branch employees will continue to work from home until Aug. 31, even as branches begin opening up this week, which is a boon for parents still uneasy about — or unable to access — camps and day-care services.

“We closed a day or two before other banks, just recognizing what was happening, and moved people to drive-up or leveraging technology,” he said, noting that lines were sometimes long, but customers were able to access the services they needed, in some cases using interactive teller machines (ITMs) at two locations.

“We’ve walked a lot of people through the technology, and the customer care center reached out directly to help them. We had curbside service at some locations, and we also used that as an opportunity to talk about technology.”

Branch of the Future

All this enhanced technology goes hand in hand with what many banking leaders say is an evolving role for branches.

Branches are certainly needed, said Jeff Sullivan, president of New Valley Bank, which is opening a new branch on the ground floor of Monarch Place in downtown Springfield this summer. Like every other area bank branch, it will stress pandemic safety, with a mask requirement, six-foot distancing, and glass partitions between customers and employees.

But it will also reflect a move toward a role for branches that emphasizes financial wellness and consultative services more than routine business.

“That’s going to be the bigger component of what a community bank does — trying to help people navigate a lot of things,” he explained, before adding that there will be plenty to navigate in the coming year, when more customers than usual will be struggling to achieve stability. “Financial wellness isn’t just for people with means; it’s everybody, from somebody with an entry-level job to someone doing college planning or estate planning.”

The bank of the future will put greater emphasis on this consultative role, through personal interaction that can’t occur online.

Paul Scully

Paul Scully

“Customers, just because of the nature of the pandemic, with people staying at home, started exploring technology. An amazing number of people are using technology who, for a number of years, fought it.”

“Obviously, if it was just about technology, the big-city, money-center banks could meet the needs of every single person,” Sullivan said. “If you don’t have the technology, you’re going to fall behind, but the extra, community-focused efforts are what’s really going to make an impact.”

Kump said UMassFive has eliminated tellers — or, more accurately, it has eliminated branch employees who handle only that role. Instead, employees are trained to be “universal agents,” able to tackle multiple roles, from traditional teller business to loans and other matters.

To achieve that, the credit union has tripled its training budget over the past few years, seeking to identify not only financial skills, but empathetic personalities with a real desire to help people.

“The face of banking is changing permanently. Branches in the future won’t be as critical, with fewer transactions coming in. But they will always be needed for key parts of financial life,” he explained, citing anything from home and auto loans to opening memberships to simply seeking financial advice.

“We won’t need the huge teller line anymore. We won’t need as many branches, and the services we’re providing in the branches are changing, he added, noting that customers are also discovering they can conduct routine business face to face — sort of — through ITMs. “Someone could be at the Northampton drive-thru, talking to someone working from home in Belchertown.”

That raises the question of how many workers need to be on the premises, both while COVID-19 is still a threat and afterward, considering how effectively operations have continued during the pandemic.

Jeff Sullivan

Jeff Sullivan

“Obviously, if it was just about technology, the big-city, money-center banks could meet the needs of every single person. If you don’t have the technology, you’re going to fall behind, but the extra, community-focused efforts are what’s really going to make an impact.”

“From a back-office standpoint, about half are working remotely,” Day said. “Can they continue to do that long-term? Yes, but there’s still the human element, and people can feel isolated. Feeling part of a team is important to some people, while some people are loners. But technology is certainly giving us some options.”

And the bank, which recently broke ground on its third Hampden County branch, this one in Chicopee, has certainly been discussing those options.

“More transactions are going online, but when you want to talk to a person to problem solve, especially with more complex transactions, that can certainly be done over the phone — and has been during the pandemic — but the way we’ve designed our branch of the future, there’s more consulting. If you want to come in and consult, we’ll talk to you — a lot. So frontline people will still need to be there to handle questions and solve problems.”

Getting Through the Pain

In fact, banks and credit unions never stopped solving problems over the past few months. Scully said Country, like other banks, was able to accommodate deferrals of loan payments for individuals who has been furloughed or were generally dealing with greater financial stress.

“I felt like this was a watershed moment,” Day added, noting that more than 200 mortgage borrowers and 200 commercial borrowers took advantage of three-, six, or 12-month deferrals, the latter being the most popular option. “Having been through downturns in my career, I knew that we needed to give people some time. People are resilient, businesses are resilient, but they needed some time. So we worked with residential and business customers on deferred payments.”

Kump said UMassFive issued forebearance on nearly 1,000 loans for people who were “furloughed or just worred,” as well as launching a small-loan program for those who just needed a little cash. “If you were furloughed, that didn’t change the decision to make a loan for you.”

That was in addition to PPP loans, which the credit union approved for members and non-members in the community alike, 96% of those loans issued to employers of five workers or fewer. It also looked for other ways to support community needs, such as donations to food banks and organizations like Community Involved in Sustaining Agriculture, as well as donating meals to first responders.

Although those needs still exist, banks and credit unions are beginning to get back to normal operations, expanding branch operations under enhanced safety protocols — “it’s a great time to be in the plexiglass business,” Scully said — while considering the lessons learned during the months when most business was conducted remotely.

“Was there frustration at first? Absolutely,” he added. “At first, people were like, ‘what do you mean, a bank is closed?’ But as every industry started to close and people started working remotely, people began to understand.”

After all, a bank that saw a fire ravage its headquarters in 2008 and a tornado rumble through its home region in 2011 has no problem posting social-distancing reminders and directional arrows and getting back to branch business. “This is bigger than a tornado,” Scully said. “The lesson we’ve learned is to always be prepared and remain nimble.”

Even as it moved from a soft-opening week to broader branch service — where walk-in traffic is allowed but appointments are still advised to reduce the wait — Kump marveled at how the credit union’s members have adjusted to remote business. Especially new members, 90% of whom have been joining online, compared to 40% to 50% in a typical year.

“There’s a percentage of customers who will still be reluctant to walk into a business,” he added. “We’re seeing that with restaurants opening and people still not coming.”

It helps, of course, that many have discovered the power of digital banking.

“For a lot of folks, it’s generational; they’ve been intimidated by technology, of depositing a check with a picture on their phone,” Kump continued. “Now they’ve been forced to do it, and they’re asking, ‘why was I taking time out of my day to run over to the credit union to get cash or transfer money? I don’t have to do that.’”

Day also expects people to keep using those tools, but for those ready to return to the branch, even for matters as basic as depositing a check, they’ll do so protected by masks, shields, and any number of other precautions. “The pandemic isn’t over, and people are still going to get sick. We want to keep people safe.”

Bottom Line

Usually, when BusinessWest talks to local banks and credit unions, it’s about their own business outlook for the year ahead, but this is not a typical year, and talk of asset growth and loan portfolios has been pushed aside to some degree by the need to simply stay afloat — and keep customers afloat, as well.

“The outlook is generally positive, but it will not be without pain,” Day said, speaking for both Florence Bank and its customers. “We know it will get better. It’s just a matter of when.”

Joseph Bednar can be reached at [email protected]

Coronavirus

Supply Chain of Events

Supply chain.

That’s a two-word phrase that had rarely made its way into the lexicon of most area residents before the COVID-19 pandemic; it was generally assumed that the shelves in the stores would be crammed with product — because they always had been.

But in a year when there have been shortages of cleaning supplies, surgical masks, beef, fish, hair coloring, paper towels, ice cream, rice, frozen pizza, and, yes, toilet paper — a product that has become a metaphor for a crisis — people can no longer take supply chain, and full shelves, for granted.

This has been a learning experience — on a number of levels.

So too for those who work to keep the shelves stocked. For them, it’s a time of relationship building, finding new ways of doing things, and providing ongoing proof that, while the supply chain has been bent — severely and repeatedly — it hasn’t, in their minds, been broken.

“The supply chain has definitely been tested through all this, and there have been shortages of some things, as everyone knows,” said Michael D’Amour, chief operating officer at Springfield-based Big-Y, the fourth-generation, family-owned grocery chain. “But, overall, I think this crisis has shown just how resilient the supply chain is.”

 

Michael D’Amour

Michael D’Amour

“The supply chain has definitely been tested through all this, and there have been shortages of some things, as everyone knows. But, overall, I think this crisis has shown just how resilient the supply chain is.”

 

Doug Baker, vice president of Industry Relations for the Food Marketing Institute, (FMI) agreed.

“Almost weekly we’re getting back numbers, and we’re still seeing double-digit growth across many categories — and you can’t have double-digit growth if inventory is not available,” he said, referring to specific product lines ranging from cleaning supplies to frozen foods. “It’s just a matter of matching inventory with consumer demand, and that’s been the challenge.

“And that’s why we’ve seen shortages — because that inventory output hasn’t been able to rise to the level of consumer demand,” he went on, adding that recent numbers show a slowing of demand that is giving many producers at least a chance to catch up.

In March, on average, the industry was seeing 35% to 40% increases in overall sales volume, Baker said, while in late May, the number was closer to 20% to 25%.

“We’re seeing sales slow, which is helpful because it allows the supply chain to catch up to an extent,” he explained. “But we also have to understand that those are still pretty significant increases, and we’re not going to go back to pre-COVID days, because the public still has yet to engage in a livelihood that they engaged in before the pandemic, and that’s based on where you see them spending their food dollar.”

D’Amour agreed, noting that, as May turned to June, a good number of people were still in something approaching lockdown mode. They were eating most meals at home because restaurants were only open for takeout. They were also still working at home and, therefore, eating lunch at home. Meanwhile, children are home from school, and college students are home as well. This all adds up to people buying more at the supermarket.

As phase 2 of Gov. Charlie Baker’s reopening plan takes effect on June 8, restaurants will be opening for curbside dining, and preschools and day camps will be reopening. And as more and more people go back to their offices — the ones they left in March for space on their dining room table — the ratio of food dollars spent out of the home will start to rise higher.

How long it will take to reach pre-COVID levels — when 54 cents of each dollar was spent outside the home — remains to be seen, said Baker. However, what is certain is that the situation is fluid at best and it could change in a hurry if cases start to surge, a second wave arrives, and people start spending more time working — and eating — at home.

Doug Baker

Doug Baker

“We’re seeing sales slow, which is helpful because it allows the supply chain to catch up to an extent. But we also have to understand that those are still pretty significant increases, and we’re not going to go back to pre-COVID days, because the public still has yet to engage in a livelihood that they engaged in before the pandemic, and that’s based on where you see them spending their food dollar.”

Meanwhile, this new normal has essentially forced chains like Big Y to forge new alliances with suppliers, said D’Amour, noting that as restaurants, colleges, and schools of all kinds closed earlier this year, this created an enormous surplus of inventory, but put the demand on grocery stores, while also creating an opportunity to redeploy goods and resources to grocery retail to meet demand and reduce waste.

One such alliance, one that typifies how suppliers and grocers are working together to forge solutions, involves Little Leaf Farms in Shirley, a local partner and grower of lettuce that saw demand decline dramatically as schools and restaurants closed a few months back and was looking for new opportunities to sell product and reduce the kind of waste that was seen almost nightly on major news broadcasts.

“They’re one example of so many local partners who have sat down with us and worked to figure out how to maximize business between us and keep their stuff growing and moving through the pipeline when the restaurants were shut down,” D’Amour explained. “We worked with them on supply and hotter deals and pricing to keep it moving through the grocery channels.”

For this issue, BusinessWest talked with several players involved with supply chain about the lessons learned to date and how they will help the broad food industry through the uncertain months to come.

Food for Thought

As noted earlier, the laws of supply and demand generally take care of shortages on store shelves — in normal times.

But these are not normal times, said those we spoke with. Still, those laws have applied to items like surgical masks. Hard to find only six weeks ago, they are now seemingly everywhere, and in large quantities, as a number of companies started making them — and more of them.

“Everyone’s getting into the mask business now,” Baker explained, adding quickly that it’s much easier to convert machines to make those products than it is to supply more canisters of Lysol or make more rolls of toilet paper, as simple as that might sound.

“Paper manufacturers have been putting in additional lines,” he said. “But the challenge the industry is facing now is that there two types of fiber used to make toilet paper — there’s recycled fiber and there’s virgin fiber, and with recycled fiber, the supply is low, and not every machine can be converted to use virgin fiber, so you’re going to have less output if you can’t convert.”

And sometimes, because of the pandemic, producers simply cannot meet demand.

That was the case for several weeks — although matters have improved — when it came to supplies of meat and chicken, said Baker, noting that, early on, plants were shut down temporarily. And when they reopened, to keep workers safe, production lines were altered in ways that actually slowed production.

Such specific cases help explain shortages of particular items, said those we spoke with, adding that, overall, many of the empty shelves result from unprecedented demand and panic buying that is starting to wane in many instances. But as the year continues, more lessons will certainly be learned, said D’Amour, adding that there have been plenty of learning experiences already.

Elaborating, he said that, from the beginning, those at Big Y have been watching what’s happening globally, anticipating, and “trying to get on top of things” — a phrase he would use many times — when it comes to everything from employee and customer safety to creating efficient traffic flow in the stores, to keeping items on the shelves.

This has obviously led to new policies and procedures — from the directional arrows on the floors to special hours created for seniors to the plexiglass screens at the check-out counters.

“For us, the biggest component is the people part, and that continues to be stressed by our suppliers, wholesalers, and others,” he said, adding that, while much of that panic buying and hoarding is being talked about in the past tense, the need for diligence remains, and chains like Big Y can’t let their guards down.

Getting back to the supply chain, D’Amour said it has been a struggle in some well-documented areas, but suppliers are responding by trying to increase supply and also reduce the number of overall SKUs to help put some product on the shelves.

“Where people are used to walking down the paper aisle and seeing 150 different choices of bath tissue and paper towels, now they’re seeing far fewer,” he said. “But products are coming back; we’re working with all our partners to get them back in.”

Perhaps the biggest key to providing quality service to customers during the crisis has been efforts to forge new partnerships and stronger relationships with those within the food-service industry, said D’Amour. He mentioned ongoing work with Springfield-based Performance Food Group as one example.

“They’ve done a phenomenal job working with us, working together, to figure out what food they have stuck in the pipeline that we can use,” he explained, adding that, over the past several months, PFG, as it’s called, has even helped with trucking and labor for either Big Y’s warehouse or at wholesale partners. “Most of these partnerships we’ve had have been mutually beneficial, but there are strategies and tactics that we’ve never done before; everyone’s been very open and ready to fight the battle, work together, and think of new ways to partner for the benefit of the consumers.”

Which brings him to Little Leaf Farms. Paul Sellew, owner and founder of that facility, which began operations just four years ago, said it is now part of a larger local-food movement that not only puts fresher produce on the shelves, but in many ways helps ease flow of product through the supply chain.

“People don’t realize that 95% of the leafy greens that you see in the grocery store are grown in California and Arizona,” he explained. “And when you have this global pandemic, an unprecedented situation, that puts stress on the supply chain, so imagine managing a supply chain from Selinas, California to Springfield, as opposed to my supply chain, from Devens, Mass. to Springfield.”

Little Leaf has historically seen much of its business fall into the broad category of food service — restaurants, schools, and other institutions. But with the pandemic and the sharp decline of demand on that side, the company, like many other suppliers, has shifted into retail grocery, which has been a win/win/win, for those growers, the grocers, and, ultimately, consumers.

“When you get these unprecedented events, you really want to make this region stronger and more resilient, and food is such a strong, fundamental component of that,” he went on. “And that’s why we’re so grateful for partnerships like the one we have with Big Y, which has supported us from day one.”

Overall, there is a ‘new normal’ within the grocery/food-service industry, a phrase now being heard in virtually every sector of the economy. It involves a landscape that could change quickly and profoundly depending on the pandemic and its impact.

No one really knows when there will be real light at the end of the tunnel, said D’Amour, adding that Big Y, like all those it is partnering and working with, needs to remain nimble and flexible, and continue to work in partnership with others to not only keep the shelves stocked, but also keep people safe.

Bottom Line

Summing up the past several months, those we spoke with said it’s been a challenging and in many ways difficult time, where, again, many important lessons have been learned that will serve consumers, suppliers, and retailers well in the uncertain months still to come.

“The United States is a country of abundance, and the supply chain is a beneficiary of this abundance,” Baker said. “Yes, the supply chain is strained, and some shortages will be experienced, but it’s not broken — there are not critical disruptions in the supply chain.”

The hope, and the expectation, said D’Amour, is that things will stay that way.

George O’Brien can be reached at [email protected]