Many individuals whose financial health was impacted by the COVID-19 pandemic continue to struggle, even as the economy recovers. For those folks, the recovery process may be long and require outside intervention. If banks and financial institutions want to retain their customers and improve their financial health, banks’ empathetic response to customers’ financial struggles during the pandemic needs to continue, too.
The pandemic showed us that many of us are only one unforeseen hardship away from financial disaster. Nearly one in four people faced food insecurity last year. Many live paycheck to paycheck. A job loss, an eviction, a late credit card bill, or the inability to afford childcare can mean financial instability for an entire family.
In a 2020 survey of 2,000 consumers, NerdWallet found that while some people benefited from the chance to save and pay down debt during the pandemic, other families were devastated financially. Of those who say their household financial situation has gotten worse since the pandemic began, 45% say they now have debt because of it. Forty-five percent also say that they took money from savings in order to pay bills and to cover necessities as a result of their worsening finances.
The pandemic and its associated financial stress have had a disproportionate effect on some segments of the population. According to a study conducted by Pew Research, lower-income adults are likely to say that they or someone in their household has lost a job or taken a pay cut. The same study stated that there is “no clear consensus among Americans on who should be responsible for making sure people can meet their basic economic needs during the pandemic.”
What if the financial services industry embraced this opportunity to be part of the solution, adopting innovative strategies and approaching customers in need with support? What if, when a customer could not pay, financial services firms met them with assistance? During COVID, banks waived fees and penalties. Instead of returning to the way things were prepandemic, banks now have the opportunity to continue responding compassionately to their customers in ways that will help them build their savings, gain more stability — and ultimately, become stronger and more loyal customers. And when they do, banks reap benefits, too.
COVID-19 changed our institutions, and it altered each one of us. For individuals and companies alike, it normalized the act of providing assistance to those in need. This must continue. This is a unique opportunity for banks to step up and do good and benefit from doing so.
People are searching for institutions that can continue to provide financial assistance, relief, and guidance even as the world emerges from the pandemic. According to a 2020 survey, 83% of lower- to middle-income households want to turn to their banks for help — and banks can help their customers by providing their customers with the resources they need.
Now, more than in recent history, banks have the ability to connect their customers with local, government and nonprofit relief, as well as loans, financial planning and other social programs that can help them achieve financial wellness. Due to the pandemic, governments at all levels and nonprofit organizations added thousands of new financial resources to help families through the crisis.
There is much help available now, but customers may not know that help exists or whom to trust. Financial institutions are in the right place to provide all of the financial services that people need, including access to these resources. This will benefit customers and institutions alike — increasing repayment rates and securing a positive relationship with their customers when these resources provide the support they need.
During the pandemic, we saw that banks had the power and resources to step up to the challenge and respond to their customers’ needs. Going forward, if banks want to keep their customers’ loyalty and trust, they need to keep financial health a priority.
We all do well when we do good. We don’t have to return to normal — we can decide to be better and do right by our customers. It’s a win-win for all.
