Joseph F. Casey

The COVID-19 pandemic didn’t change the way we bank – it just rapidly accelerated the changes that were already underway, moving us all much more quickly into a world of high-tech banking by phone and laptop. But ironically, the crisis also proved that the personal touch, the bank and customer human relationship, won’t be going anywhere anytime soon. 

First, from the classroom to the office to the bank, the virus has been transformational for virtually every sector of society. Community banks have a particularly challenging road ahead as they grapple with the behavioral and technology changes that will be required much sooner than we all thought. What may have been only in the works before the pandemic is now the norm. The crisis has pushed us into the future on everything from mobile check deposits, payments, borrowing, transfers, text banking – essentially every facet of banking – much of it done face to face only months ago. 

The investment in technology, communication to clients and customers on ways to bank digitally, 24/7 customer service, and the creation of teams of tech-savvy banking professionals – if your community bank is going to survive, then all of those have been expedited by the urgency of the pandemic. 

Community Banks Beat Megabanks 

And for community banks, where financial education is central to our heritage, the ability during the crisis to deliver high-impact virtual learning is something we have in common with the education system at large.  

HarborOne U, a decade-old educational center devoted to life-long learning for individuals and small business, was able to quickly pivot from a classroom learning curriculum to an online delivery model that has successfully allowed the bank to reach more individuals and entrepreneurs. Additionally, making recorded sessions available to customers to participate at their convenience has permanently changed our approach to delivering high–quality, convenient, relevant and beneficial programming.  

For smaller banks competing in a world of rapidly evolving technology amid the expansion of the big banks into community markets, these changes are necessary to keep and grow customer relationships, with or without COVID-19. But the pandemic has also showed us why megabanks – massive institutions with worldwide reach – are not going to replace community banks, and why technology is not going to replace people. 

When the federal government stepped in with the Paycheck Protection Program aimed at helping mostly-small businesses get through the crisis and keep paying workers, it was community banks – with their personal connections to customers – that were able to move the money quickly and efficiently into the right hands.  According to the federal Small Business Administration, in the first months of the crisis banks with under $10 billion in assets had completed 65 percent of the PPP loans, while small- and mid-sized business owners detailed weeks of frustration getting through to the megabanks. 

The path forward for community banks to succeed is laid out pretty clearly in these two pandemic outcomes: We need to compete with the best in technology and tech-skilled bankers; and we must be careful not lose our strongest advantage over bigger competitors: the human touch. 

The End of the Branch? Hardly 

None of this spells the end for brick-and-mortar banks. If it did, HarborOne would not be opening branches this fall in Quincy, and early 2021 in South Boston. 

But it does signal an evolution of the in-person bank branch experience: one that is both responsive enough to customer needs as they exist today, and flexible enough to meet their changing needs tomorrow. 

One obvious change is simply a matter of volume: Customer visits for traditional banking transactions have declined steadily as digital banking services have expanded and become more comprehensive. While the pandemic accelerated those changes, it hasn’t and it won’t completely erase that demand. The key to success moving forward will be the efficient “hybrid” delivery model, which provides skilled branch bankers to serve more complex customer needs face-to-face, while technology efficiently manages transactional banking. It’s a new balance of providing the resources where they provide the most value for customers. 

There is a customer growth story here, as well: The personal touch – and in-person service – for investment guidance, specialized loan products, initiating and managing commercial banking relationships and other services that are more complex than simple managing checking, savings, money market accounts, CDs and other routine transactions. 

Just because fewer customers will be serviced in person doesn’t mean customers will receive a lesser level of service. In fact, quite the opposite is true. As customer visits become more unique, intermittent and specialized, the opportunity to create a premier person-to-person banking experience will allow community banks a new dimension on which to differentiate from their megabank competitors. 

That’s a good thing for smaller banks, and a good thing for customers. 

Joseph F. Casey is president and chief operating officer of HarborOne Bank