8 Ways Financial Institutions Must Prepare for the Next Pandemic
Chances are many of the coronavirus issues banks and credit unions have been facing during 2020’s first half could surface again, either in a second wave of COVID-19 come fall or in the form of some new disease. Special readiness testing performed internally or by outside experts could help ensure that your institution learned the key lessons of the unprecedented outbreak and its massive economic upheaval.
No one knows how long the threat of COVID-19 will last. But most agree that few things will go back to the way they were. Instead, we’ll see a new normal created under a new risk landscape, and both will continue to evolve.
This future creates the need for a COVID-19 Executive Readiness Test. Such a test can help executives risk-rate their institutions in eight specific categories to get a better handle on their gaps and confirm their strengths. Typically, C-level team members bear responsibility for adapting their institutions’ strategies and protecting their institution’s assets, brands, and health.
Dozens of articles have predicted how everything in banking will go digital, eliminating the need for physical branches and potentially even leading to the end of cash. COVID-19 has been accelerating this trend. But how long will the transition take? Nobody really knows. Many people, including seniors, have moved to digital channels in this period. However, a large percentage of people using financial institutions still prefer interacting with other people. So the immediate future looks like a blend of digital channels with traditional channels, although business done in the latter may look somewhat different. Institutions must be prepared for both. This leads us to the Executive Readiness Test.
The following eight categories form a framework that executives and their teams can use to review their risk ratings, evaluate their readiness, and devise their COVID-19 plans going forward. Over time the importance of one point over another may change, as conditions evolve.
1. Reviewing and Tweaking Business Continuity Plans, Pandemic Plans & Procedures
Most business continuity plans fell short as the coronavirus situation unfolded because they had covered nearly everything except a pandemic. Sure, most institutions had a plan for dealing with a flu epidemic. But coronavirus threw everyone a curve ball because of the virulence of the disease and the extraordinary and unprecedented measures that governments worldwide took in an attempt to forestall its spread.
Many lessons can be learned from the recent past, which can help in building on this first element of future planning. In this category factors like developing the ability to expand and contract an institution’s workforce play a part, as does the need to be ready to shift to 100% work-from-home capabilities.
Readiness to implement and maintain social distancing procedures should all be readdressed and updated.
2. Accounting for Pandemic-Specific Equipment and Processes
In this category, equipment analysis and processes to be safe and operational should be reviewed and possibly implemented, not just for the short term, but as part of long-term readiness.
This includes new equipment that was previously not utilized in financial institutions’ physical space, including both branch and operations centers. Some examples of such equipment include fever detection technology, video analytics, disinfection policies, and the use of ultraviolet light to sanitize branch and operations center equipment. It even includes having a supply of good old plastic sneeze guards on hand.
3. Institutions Must Adopt State-of-the-Art Remote Technologies
Much of this technology has been available, but in many cases, those who had not invested could not meet public demand for such alternatives. Those who had made the investments were extremely thankful they had.
Interactive teller machines, secure video banking and lending, and even functional pneumatic tube systems allowed many banking operations to address consumer safety concerns.