Forces of Change: Surviving the COVID Recession

Forces of Change is a collaborative effort to help understand the overarching themes of the changes in the consumer and cultural landscape.  Several industry leaders contributed their skills to develop a unique perspective on the impact of all the changes happening. The original research was conducted in April of 2020. We have stability in the main themes that we identified, though how the themes are presenting themselves have changed somewhat. The full report is available for download here.

I hope to provide a little perspective on the state of the hearts and minds of consumers and shoppers, behaviors that are likely to stick, and implications for financial services product offerings and competitive strategy. Things will continue to change for the foreseeable future, but a few Forces of Change appear to be here to stay.

Financial Stress & Worry

Other than personal and family health concerns, financial stress and worry are the most common emotions people are experiencing as we recover from the shutdown and await a vaccine.

Given the daily priorities for your customers, you can imagine the impact on where they shop for “nice-to-have” and “must-have” products and services to manage through their new normal. Those fortunate enough to remain employed are certainly not taking it for granted, and they are seeking expert advice to reallocate their assets and contingency plan.

As business leaders and owners, we can certainly empathize. As a brand, product marketer, or service provider, has there ever been an easier time to understand and connect with your customers’ needs? If you can provide products and services that relieve or minimize the daily financial stress and worry, you have an unprecedented opportunity to build trust.

New Behaviors Become Habit

As brick-and-mortar retail and small businesses reopen, we are realizing people have formed new habits out of necessity. As a result, how customers interact with their financial institutions, and how they pay for things have changed forever.  For most categories, including financial services, the migration to e-commerce and home delivery or curbside pick-up will continue to accelerate.

Buying a home or vehicle may be the only remaining activities where at least one in-person interaction will remain necessary to complete the transaction. If you are a financial institution that does not yet offer an e-commerce solution in key product categories, you better get there quick. Concern for health, safety, and security as it relates to bank accounts, insurance, credit, and payment processing will continue to drive choices. Value will certainly be part of the equation, but convenience and secure access to delivery options will be critical.

Broad Digital & Virtual Impact

Perhaps the most disruptive behavior that will stick in financial services is the virtual meeting with your banker, loan officer, wealth manager, or insurance agent. What has always been a very personal relationship has transformed into a virtual experience. Currently, our data predicts nearly 50% of financial transactions will be online in the next year which will have serious implications for brick-and-mortar institutions. For decades, the convenience of a local branch has been the top driver when choosing a bank, but the location is no longer a top priority. How quickly and how well financial institutions can adapt will determine who wins.

All this change has opened the door for creativity and technology at a level before not possible in a largely change-averse industry. To process massive volumes of PPP loans, many banks were forced to quickly partner with tech start-ups. Those that didn’t act quickly enough paid the price and tech players have stepped in to provide convenient and secure transaction processing to help migrate most transactions online. These new partnerships will likely continue post-pandemic and forever transform customer service models and efficiency levels.

Post Vaccine Strategy

What does this mean for a post-vaccine strategy? While the pandemic will come to an end, it will do so in a recession economy with a continuation of digital, safety, and value-based decision-making.

Based on this reality, these are the top priorities that could you a leg up on the competition:

• Invest in customer experience – In the rush to digital and mobile, pay close attention to the customer experience. Invest in making it the safest, most secure, and easy-to-use customer touchpoint.
• Don’t stop innovating – Your customer has new needs, values, and priorities. Creating new offerings and virtual connections that help them save, plan, and take care of their families will create new opportunities.
• Overcommunicate your brand purpose – Customers want to know how your brand is supporting health, safety, community, and value. Find ways your brand can have a significant positive impact and walk the talk.
• Technology holds the keys to the future – The future is tech-forward, so if you have been a fast follower or laggard, identify where you have gaps and decide on a make, buy, or partner strategy.
• Unlock the research budget – Your primary research, syndicated data, predictive analytics, and forecasting models may be outdated. You need new research and insight more than ever, and you need it yesterday. Now is the time to experiment with new methods and partners to help predict where customer needs and the competition are headed.

Click here to read the full report

Personally, it has been a pleasure to be a part of the Forces of Change team. Good luck and please get in touch if you want to brainstorm what comes next.

Sincere appreciation goes to BuzzBack, Consensus Point, Converseon, Embee Mobile, Panoramix Global, and Gen2 Advisors for their effort and dedication to making this work available to you.  There was also generous support provided by Greenbook, Blue Ridge Insights, and Prodege.