H.Now that most industries appear to have weathered the Covid storm, they are considering their place not only in the present but also in the post-pandemic future – and banking is no exception.
“Most community banks come out from that perspective, certainly from a reputational perspective,” Cynthia Merkle, president and CEO of Union Savings Bank, told the Business Journal.
Merkle, who is also the chair of the Connecticut Bankers Association, has awarded the Paycheck Protection Program much of the credit for it – and the flexibility that smaller banks have shown in processing PPP loans, especially in the early stages last spring.
âThis first phase was challenging for everyone,â she said, âand the regulations seem to change daily, if not hourly. And a lot of people panicked in the early days, but eventually customers settled down and got less angry. “
According to Merkle, USB has taken out nearly $ 200 million in PPP loans. The board also acted quickly to raise funds for hospitals, pantries and nurses’ associations in a matter of weeks, rather than waiting for the usual peak of its funding cycle in the fall. As a result, $ 650,000 was inherited last year.
For such efforts, the Danbury-based bank was named the top ranked bank in Fairfield and Litchfield counties in a recent national survey. An unexpected honor that Merkle said she owed exclusively to the employees at USB.
Almost 200 of these employees have been working mostly from home for the past 15 months and are only now being brought back to their 26 offices. Seven employees were recruited for a customer contact committee to find out how customers and employees can best be protected in the future.
Eight others form a second committee, which is charged with making recommendations on the future working environment of the bank.
“I never would have thought that people could work from home as productively as you can,” said Merkle. “It quickly became clear that they could still deliver for our customers.”
Merkle expects that more flexibility for working parents and long-distance commuters could become a new standard.
“We have a few team members who live in Poughkeepsie,” she said. “Saving her two hours a day commuting would be of great value to her and us.”
In the meantime, the bank continues to try to stay one step ahead of the technology curve, which Merkle admittedly can be a huge challenge. While recent innovations such as contactless debit cards and an instant debit card issuance program have received high marks from customers, significant challenges remain.
“Sometimes we don’t see our customers at all,” said Merkle. “Our Net Promoter Scores rose dramatically during the start of the pandemic.”
“Our competition today is so different than it used to be,” she continued. âThe Venmos, fintechs, what have you got – they all mean that banks have to cut their silos in order to implement new products quickly. We hired a new core processor in 2017 that we use a lot for beta testing new products. “
Although USB’s loan default rate “is probably the lowest we’ve seen in years,” Merkle said she had “a nagging feeling that something has to be given at some point.”
âA few years ago we had tenants in buildings that were threatened with internet sales,â she recalls. âPlaces like restaurants, nail and hair salons didn’t have to worry about that. But then the pandemic comes and it’s the restaurants, nail and hair salons that have been hurt the most. “
Merkle noted that the low interest rate environment is likely to change. âDeposit rates are unlikely to go down any further, and yet lending rates have flattened out. Interest rates will be a huge challenge for all of us. “
And of course the question arises of a return to “normality”.
“Much depends on how quickly people return to their old behavior,” admitted Merkle.