Canadians are increasingly feeling overwhelmed by the impact of COVID-19. Between daily (even hourly) updates on the COVID-19 case numbers, multiple rate cuts, and the general sense of fear and panic the media exhibits, it's difficult to filter out the noise and not fall victim to information overload. On top of this, we're dealing with a new way of life. People are adapting to combining the complexities of working from home, mandated home childcare, and for some the experience of homeschooling.
Over two million people have already applied for employment insurance and are unsure of how they will support themselves and their families. Understandably, many Canadians are worried about job security and market volatility over the next three to 12 months. Most people don't have the time or mental capacity to wade through the confusion of their current financial stress and figure out how to take advantage of new government mandates; they want the banks to step up and help fill in the blanks.
Understandably, the response from financial institutions has been more reactive than proactive during these early stages of COVID-19. While institutions have been focusing on providing tools for their front lines staff to continue servicing customers while working remotely and increasing the resiliency of their operational practices and infrastructure, customers see answers on what programs are available and how to apply. Traditional communications strategies focusing on products and channels rather then a customers relationship need to be quickly adjusted so that Institutions can support customers through the pandemic, and strengthen bonds with customers.
Between newly introduced government mandates and social assistance measures, customers require a different level of service. Financial institutions need to shift towards a more relationship-focused approach that considers a customer's whole portfolio when developing communication strategies and new tools to help customers navigate the abundance of information and financial uncertainty. This approach will not only strengthen customer relationships but will also better manage the financial health and default risk of its customers. The objective needs to be that by focusing on overall relationships and health, banks can leverage their AI and predictive analytics engines to identify in advance those customers who will soon be in distress, and offer timely support where needed.
Over the next 12 months, we will see the ramifications of the COVID-19 pandemic and how market volatility will play out for different customer segments. As such, banks will need to be prepared to offer the right support at different times and to sustain this approach over an extended period of time. Support for younger generations, with high digital fluency but lower job security, will differ from that given to a baby boomer, with low digital fluency but without the issue of job security. How financial institutions can implement these supports, and how successful they are, will be the key indicators of success going forward.
The events of March have demonstrated that banks are ill-equipped to cope with unforeseen crises such as COVID-19. March should be treated as a pseudo-dress rehearsal, with the worst months most likely yet to come. Financial institutions need to adapt internally and look at capital spending to reduce and reprioritize funding to funnel it towards COVID-19 related initiatives for the near and medium-term.
This crisis requires a coordinated set of digital, assisted channels and operational tools for financial institutions to continue to be the trusted advisor to customers, and guide them through critical financial decisions that are impacting their ability to meet daily needs.
In this three-part blog series, we will identify the next steps that financial institutions should be taking. These steps will outline how to minimize impact to their business during this pandemic, and create a pandemic customer strategy that supports all customer segments, to build and maintain lasting customer trust during these tense and uncertain times.