The endless fodder has already begun, which industries will be the biggest winners and losers post COVID-19? Clearly a lot of “non-essential” small businesses (try telling a small business owner that their business is non-essential) will not survive from being closed for so long. Big winners appear to be the “essential” companies allowed to remain open. The debate will play out for decades to come.
That said, I think we can all agree that smaller banks and financial institutions appear on nearly no one’s list of future winners and, in fact pre-pandemic, these smaller financial institutions were already under pressure to be more agile. Many had lost ground because they lacked the innovative capabilities to meet growing customer expectations.
Thus, the logic goes: problem then equals bigger problem now.
I disagree. Despite the long odds, smaller banks and financial institutions are the ones to bet on going forward.
Small Banks and Financial Institutions Are Potential Big Winners
It’s true that COVID-19 has changed the world and the business landscape irreversibly. For some, the federal intervention and ensuing government rescue programs may be too little too late. For others, including anyone who has ever dreamed of starting and growing a business, opportunity abounds. For those looking to invest in and support small business, this moment comes along once in a generation and just might be the perfect set up for small banks if they play their cards right.
Here’s why
Bank CEOs are determined to be on the right side of change in the new COVID-19 economy, recognizing for this to happen they need to innovate fast. For community banks, credit unions and smaller financial institutions the marching orders are clear: fill the innovation and customer experience gap quickly by partnering with smaller fintech companies who only have an interest in helping you grow and better serve customers and members.
A new era of inclusion, collaboration and innovation is about to begin, and small banks relying on online platform partnerships will help lead the charge. Superior digital experience will become the new normal, which then opens access and opportunity to more people and businesses than ever before. Therefore, it’s quite possible that smaller banks and financial institutions will drive this new age of customer experience and financial inclusion, enabling individuals, businesses, and investors to interact and transact in unprecedented ways.
In the COVID-19 economy, all of us – individuals and businesses alike – are looking for a new way forward, a solution to the challenges of the current crisis. Small banks are no different. They face the same predicaments that were once limited to those seeking to start, grow or invest in a business; not knowing where or how to begin and lacking the access, know-how and connections to do so. Today we are all in the same boat and need to work together to solve our common problem. Banks have an historic opportunity to jumpstart a decimated economy by remaking a business ecosystem that is better and far more inclusive than the one we have left behind.
Mindset Change
Post COVID-19 smaller banks and financial institutions must hone-in on new opportunities and fresh approaches. Ones that are not proxies for conventional wisdom, the status quo or groupthink. But rather a way forward that lays the groundwork for the new era of Post COVID-19 success, showing how virtual and business life can coexist and succeed together on a grand scale. A true solution to the challenges of the current crisis.
Clearly, this is not the time to play it safe. Rather, the opposite is true. Bank leaders need to step up, be unconventional and take dramatic action or be left behind. Echoing these sentiments, Johnson & Johnson’s CEO Alex Gorsky stated: “This is a bit of a moonshot for J&J going forward, but it’s one we feel is very, very important for us to be doing at this period in time.”
Gorsky makes it clear that doubling down on efficiency and survival mode amid disruption is far too risky. Not coming up with new growth and innovation strategies is unacceptable. Failing to develop external partnerships and new business/product models that focus on stakeholder value is a non-starter. It is imperative to create a virtuous cycle where everyone wins, demonstrating how much more your institution can and will do. It is time to drop the silos and reach for the stars — not unlike the Manhattan Project or the Space Race — and do something big.
The shift to digital platforms
To do that, online platforms will play an outsized role going forward. They are the key to the future, creating a new era of inclusion and collaboration for a better tomorrow. In the race to deliver the best customer experiences, banks and financial institutions will increasingly turn to platforms to accelerate interactions and transactions, giving super-participation powers to users. Platforms like Robinhood (young professionals), Tinder (young adults), and Shopify (online store startups) have already demonstrated how changing the user experience for a market segment can trigger successful industry disruption and virtuous cycles.
New digital marketplaces and business membership communities from DealRockit, create deeper partnerships and collaborations, allowing financial institutions to offer free products with far-reaching capabilities and benefits to invited clients, prospects, and business/referral partners. The company’s multi-marketplace, customer engagement software, optimizes customer experience and financial inclusion, making it simpler to scale and fund innovation by bringing together buyer, seller, investor, capital seeker, and service providers into an inclusive collaborative space.
DealRockit’s breakthrough technology offers a ready-made solution to the growth and innovation challenges of the current crisis: It’s fast and does all the hard work for you, allowing banks and insurers to compress cycles and unleash digital products in days, like their bigger competitors are trying to do.
The New Heroes
America’s exceptionalism comes from startups and small businesses and institutions. Thus, our new “go to” could very well be those smaller financial institutions, yes those very ones already under immense pressure prior to COVID-19, that thanks to partnership platforms will now be able to answer the challenge of releasing digital products and growth tools in days or weeks rather than being left behind. These firms will not only meet the challenges of today but help bring inclusion to more people and businesses than ever before.
It will be these visionary banking firms, using the combination of platforms and never thought possible external collaborations, that will drive the new age of American exceptionalism and financial inclusion. This round of innovation and small bank success stories will largely center on how previous strangers came together quickly to achieve outsized results and became the new innovators, rainmakers, and forces for good that others aspired to be. The results? A fast track to growth, a better map for navigating change, improved customer experiences, and broader financial inclusion. That is a recipe for success.
