Among its many impacts around the world, the COVID-19 health crisis continues to wreak havoc on business—especially small and mid-sized enterprises. Just under half of the executives surveyed recently by ADP,¹ representing mid-sized organizations, believe they won’t be able to survive in the current state for more than another three months. Nearly 90 percent of the small businesses surveyed by PYMNTS.com in March have seen their revenues drop, while 55 percent have reported significant declines.²

It’s no surprise that commercial banks are being called upon as never before for credit and cashflow-related help. Within five days of the U.S. Congress passing the CARES Act on April 3, Bank of America received 250,000 loan applications.³ Even though it has 3,000 people working to process them, that still comes down to several thousand applications coming in every hour of the day.

Over in Ireland, the Banking & Payments Federation reports that its member banks are experiencing a four-fold increase in calls seeking financial support.⁴ It makes sense that a recent Bloomberg exercise found it was taking more than 20 minutes to reach a customer representative at one bank—a far cry from the average hold time of 41 seconds which the MyBankTracker study⁵ reported in 2018.

These record-high call volumes and applications are straining commercial banks’ operational capacity at a time when they’re working hard to keep their people safe and their own services up and running.

We understand how extraordinary these circumstances are, and we offer our thoughts on how you might respond. We believe there are four key actions worth considering, to not only bolster your operations for now, but also position yourself more strongly for when the COVID-19 crisis ends. Speed is obviously paramount, and the next 10, 30 and 60 days are mission critical.

1. Enable clients to maintain operations

What small and mid-sized businesses want most of all right now is to hear their bank asking: “How can we help?” The answer may be credit options that help them manage their disrupted cashflow and stay above water. These could include new loans, loan modifications (such as payment forbearance), facility or line extensions, government funding and ways to slow any deterioration of credit risk.

To deliver on these at the volumes we’re seeing, most banks would have to scale their processes, react to the various government mandates and stimulus policies, and get money into their clients’ accounts as quickly as possible. This probably means taking two key steps:

• Establish a command center as the central place to coordinate crisis-related activities, in alignment with your broader COVID-19 response strategy.
• Build new or modify existing origination processes and systems so that clients can quickly and simply get the funding assistance they need to stay afloat. These systems should also give you the clear visibility you need to best manage the situation. Cloud-enabled digital and automated channels are the preferred vehicles as they provide for quicker, easier and safer ways to create a scalable capability. Draw on your data analytics skills to better predict credit risk and on your technology providers to help speed up the process.

2. Help businesses access financial support

Governments across the globe are launching relief measures for businesses of all sizes and they’re relying on banks to help get the money into the hands of business owners. In the US, over $250B has already been allocated with the Payroll Protection Program and another $300B, at a minimum, is expected to be forthcoming soon. Helping effectively implement government programs will be a challenge for banks, but is critical to both their customers’ success and the overall reputation of the banks.

If they haven’t already done so, commercial banks should rapidly develop their own payments and cost relief measures—things like digital loans, pre-approved extension of trade loans and moratoriums on funded facility repayments. It may also include risk management actions such as business interruption insurance, cash forecasting based on viable economic scenarios and help in exploring new business possibilities.

Next-priority actions should focus on bolstering clients’ cashflows by, for example:

• Helping them streamline fixed and variable costs and maximize tax breaks
• Possibly accessing their cash systems to look for ways to improve cash, receivables, payables and other financial positions
• Creating appropriate product propositions for clients, working with your ecosystem partners
• Connecting clients to the supply chains and financing of alternative trade e-marketplaces

3. Digitize the bank’s offerings and automate processes

One way of keeping people safe is to promote contactless business interactions. These are mostly being handled through banks’ digital capabilities—from electronic customer onboarding and online document submission to e-signature tools. If you had already invested to digitize your services before the pandemic, you may now be able to roll out your offerings—like a crisis-specific app or a new stimulus portal—more quickly and easily. In a similar way, new process automation could help free up your workforce to focus on high-value interactions with clients. These early actions could help you safely and efficiently absorb the higher volume in client calls:

• Assess how the customer journey should change due to COVID-19. Prioritize the impacts, map them to existing digital offerings and make the necessary adjustments to your internal capabilities. You may need to look at cross-functional centers of excellence, automation to deploy large-scale change, making the most of your existing digital banking services and setting up a team to steer technology changes.
• To enable the new journey, compile a two-part set of digital offerings. For the first part, extend your retail digital offering infrastructure to your commercial customers. This will encourage basic self-servicing and lighten the load on relationship managers and contact centers. And for the second part, introduce new tactical offerings such as electronic documentation to handle credit requests related to government and bank stimulus plans.
• And then you should decide on the future state of your broader IT estate and integrate your tactical solutions—those that support commercial digital engagement—with this estate to address your short- as well as your longer-term needs.

4. Proactively monitor portfolios to shield credit quality

As you dial back on your credit policies to more quickly address clients’ cashflow and liquidity challenges, you will also be watching out for a possible after-effect: higher default rates. Banks that do so will likely deploy data and analytics tools to comprehensively view and manage their portfolios. Specifically, they should:

• Quickly identify the loans most likely to deteriorate in the future (based on higher risk-based segmentation) and group them for related advice and ongoing management
• Open up a digital site where business owners can go for advice on developing and executing their COVID-19 response strategies, such as finding cheaper rent, restructuring employee contracts and accessing government funds and incentives
• Use new trigger-based, AI-powered credit portfolio management tools to proactively predict and detect credit deterioration concerns. This will allow you to warn clients early of their likely upcoming cashflow issues and micro-segment them to identify which business types will probably be hardest hit and which will recover soonest.

Of course there’s no perfect approach. But these are unprecedented times, and the steps commercial banks are taking—with great empathy—to take good care of their workers and help their clients survive are essentially correct.

We expect that a lot of the operational changes you make now to give your clients simpler credit access, management support and other business continuity backing will survive COVID-19. This kind of value-adding assistance can help build the foundation for stronger, more trusted relationships with your clients, and enable you to emerge stronger in the future.

We are all in this together. We are ready and eager to help you as you tackle these challenges, so call on us. Until then, I invite you to read our more detailed report for commercial banking or our recent Purpose-Driven Banking research, looking beyond COVID-19.

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¹ADP, “COVID-19 Impact: Survey Details the Challenges, Actions & Outlook of Small and Midsized Businesses”, April 2020
²PYMNTS.com, “New Data: What COVID-19 Is Doing to Main Street SMBs”, 3/30/2020
³Forbes, “Small Business Stimulus Loans: JPMorgan Has Received 375,000 Requests Worth $40 Billion”, 4/7/2020
⁴Finextra, “Irish Banks Struggling Under Weight of Covid-19 Call Centre Volumes”, 3/25/2020
⁵Bloomberg, “Three Hours on Hold? Banks Inundated with Nervous Callers”, 3/17/2020