As normal pre-pandemic lifestyles hesitantly resume and the coronavirus recession looms, 2020 will be a critical year for banks. With unemployment poised to skyrocket and businesses on the brink of collapse as the advancing recession hits, banking needs to be the ally this time around.
The aftershock of the 2007/8 recession was felt far and wide and even today traditional banks still grapple with blame for their role in the crisis. The residual distrust in banks has, in part, paved the way for fintech banking to scoop up wayward customers.
During the pandemic, traditional banks and fintech were the lifelines for many people and businesses, proving themselves to be a friend in a time of need. As governments look to banks to help save the global economy from collapse, will this newfound trust resume?
“The high street banks have had a good virus, and the vast majority have done some really good work, engaging with their customers, making sure that they understand what's available to them, communicating about mortgage holidays – whether they're retail or business,” says Tanya Joseph, formerly of Nationwide and now managing director of specialist services at H + K Strategies. “People stop blaming the banks and start thinking these people are really on our side.”
Since mid-March, Richard Warren, director of marketing communications at Lloyds, has been working on communicating the availability of its finance and customer support, focusing on mortgage repayment holidays, credit card repayment holidays and loan repayment holidays. It also increased its interest-free overdraft to £500 and increased the contactless limit on its cards.
From the commercial side, Warren says the bank has been concentrating on the Coronavirus Business Interruption Loan Scheme (CBILS) and the business Bounce Back Loan. “It’s important to get everyone to know about this as much as we possibly can. So we've been doing that in all our advertising – it's on-site everywhere, through social channels, it's very much communications as an information medium. That’s been full-on for the last three months.”
And while customer activity is down in certain areas of Revolut's business, its director of marketing and communications, Chad West, says what’s more important is what’s going up. “While we don’t do mortgages, we’ve seen declines in inevitable areas, like car payments. Though we’ve seen e-commerce payments skyrocket and stock trading – so we’ve been diverting our efforts into those areas, figuring out how best we can develop those products. Our stock trading feature is only US-focused, so we’ve been introducing UK stocks and EMAS."
“The challenge will be what happens after this," insists Joseph. "We will see unemployment go up when the furlough scheme ends. How are financial institutions going to manage risk? The reality is you need people to borrow." And that's hard right now.
Joseph says that even before lockdown, people were reluctant to borrow because of Brexit and the lockdown has only exacerbated that. "For the economy to survive, we need people to buy houses and to buy cars. But the reality is that banks, building societies still bear the scars of the financial crisis. The banks are always blamed for everything for a really long time. And this has given the banks (I use that term widely) an opportunity to demonstrate that we are on your side, we really care about you. We are people like you, we're not all fat cats with our noses in the trough."
Agreeing, Warren says: "Responsibility is the most important thing because we've got to give customers what they need in terms of support. It's a much more holistic conversation with customers now. We will support you through this time, but equally, what can we do to talk to you about financial resilience? That's one of our big themes at the moment is how can we, how can we fortify both personal and commercial financial resilience?"
Joseph says we're going to need nimble communications from the fintechs and from the high street banks, to help people understand what risk is in this environment and how they can avoid blow back.
"Banks need to communicate how they can contribute to support their own households and support the broader community. That message is never going to land is they - spend money to help the economy. But we need people to understand what risk is in this environment," she adds.
For Revolut, West says the brand is at the point of experimenting to become a fully-fledged bank so it's looking at things like overdrafts and loans.
"The reality is, we're still uncertain as to where we're going and we'll have to make tough calls - there may be things you're doing right now that are just not sustainable," West claims. "If so, you've got to get that tone right and be open and honest. Customers will resonate and appreciate that."
Our money marketing panel spoke with executive editor Stephen Lepitak as part of The Drum’s Can-Do Festival, an online event celebrating the positive energy, innovation and creative thinking that can make the marketing community such a powerful force for good. You can watch the interview in full here.
Sign up to watch forthcoming sessions and see the full Can-Do schedule here.