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COVID-19: Opportunities For Financial Institutions to Help Consumers and Small Businesses

April 02, 2020 by Adam Craig

In a matter of two months, COVID-19 has changed our world dramatically. It’s hard to fathom that such significant change was possible in such a short amount of time. We are seeing the impact in the U.S. manifest in rising unemployment, financial impact to almost every business in every industry, unprecedented government stimulus, and a stock market that is testing everyone’s nerves.

At Segmint, we spend every day analyzing transactional activity within the banking system. We spot indicators (Key Lifestyle Indicators or “KLIs”) typically used by our clients to drive marketing communications, trigger product offers, help stem attrition, and most importantly, enhance customer and member experience. With so much going on right now, I wanted to share a few insights we are starting to see and outline the opportunity they create for banks and credit unions.

  1. We’re seeing dramatic changes in deposit transactions and balances. This isn’t surprising given the numbers of people we’re seeing that have been laid-off, furloughed, or have had their salaries reduced. A by-product of this is not just a larger number of people getting unemployment checks, but also an increase in deposits from pawn shops and payday lenders. These represent consumers that may benefit from a conversation with their bank or credit-union, and who could benefit from products such as a short-term loan or help managing their debt levels.
  2. In areas of the country, including California and New York, major banks are waiving residential mortgage payments for 90 days for those impacted by the virus. Across all banks we are seeing increasing numbers of customers that have a mortgage with their financial institution and are not currently getting a paycheck. This represents an opportunity for banks and credit unions to notify impacted consumers that they are eligible for relief, and potentially go even farther to offer a refinance option, a skip payment plan, or increased forgiveness.
  3. It’s no secret that small businesses are being tremendously impacted by current events. Many have had to close or significantly reduce their operations just to stay solvent. Within the data we’re able to see small businesses that have working capital loans in existence, which may represent an impending forfeiture depending on the state of the business. Banks and credit unions could use data to determine which of their small business customers are at greatest risk of forfeiture, and then proactively reach out to determine if there is a way to help get them through the crises.

My hope is that banks and credit unions can use these insights to better identify customers and members that may need help, to facilitate proactive communications, and to help all of us get through the pandemic together.

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