As much of the country continues under shelter-in-place rules, the economic crunch from the COVID-19 crisis is hitting financial institutions hard. The CARES Act initially enacted a little over a month ago with additional funds authorized last week, brought some relief to small businesses and consumers with home mortgages or student loans. The onus is on banks to implement the government mandates and to handle the myriad other activities that have arisen as a result of the pandemic. The shortlist of hot spots includes:
• Employee productivity losses
• Call center volume increases
• Operations backlogs
• Communications to customers and employees
• Credit risk and default administration challenges
• BSA/AML processing delays
• Technology infrastructure scalability
How banks choose to respond to the influx of financing and forbearance requests in the short-term will have a substantial impact on both the bank’s strategic position and the economy’s health post-crisis. Banks’ management teams will need to make critical and speedy decisions that balance the immediate needs of clients, their balance sheets, their employees, and their shareholders.
In response, Capco recommends establishing a rapid response command center to ensure opportunistic, proactive measures are taken in the near-term to position the bank for innovative and profitable operations as we emerge from crisis-mode.
Banks are accustomed to setting up command centers and program offices to run mergers and other large transformation initiatives. When a crisis hits, however, first instincts are often to address the immediate issues.
The COVID-19 crisis is not going to be a short event. Financial institutions need the structure and tools of a centralized control point to manage its strategic and tactical responses across the enterprise quickly, effectively, and for a sustained period.
The key responsibilities of a rapid response command center are:
1. Business and IT integration management – Coordinating strategies and activities across lines of business and technology
2. Resource, cost and scope management – Ensuring the sufficient allocation of resources to the effort and understanding key resource constraints/bottlenecks; monitoring and controlling costs, and formally documenting the scope of activities as well as managing changes to the scope
3. Risks and issues management – Logging and managing risks and issues, and escalating to executives when necessary
4. Timeline management – Creating and managing a single, integrated timeline tracking the key activities and outcomes across the various workstreams
5. Communications management – Coordinating communications to customers and employees to ensure consistency and alignment with the bank’s strategic decisions
6. Unified reporting – Collecting, summarizing, and distributing crisis initiative reports to executive management and program stakeholders
It’s not too late to stand up a command center. The crisis is not going to pass quickly. Even when shelter-in-place orders are lifted, it’s going to take quite some time to work through the aftermath. Employees won’t all return to work at once, nor will all laid-off borrowers immediately get their jobs back and begin repaying their loans. With the right strategy and a coordinated effort, banks can manage through this historic downturn.
Capco can partner with your organization to bring a comprehensive range of tools, templates, and a proven methodology to facilitate the rapid deployment of a command center.