As the foundation of the financial services industry, banks and credit unions must continue to manage day-to-day operations but also keep an eye toward the future, as the world feels its way through life during and after COVID-19. With the industry changing before our eyes, strategic planning in 2020 is even more critical to financial institutions.

Over the past several decades, Raddon has facilitated hundreds of strategic planning engagements for banks and credit unions throughout the United States each year, and we haven’t seen a period this crucial for strong strategic planning in over a decade.

With the upheaval the pandemic is putting Americans through, it is critical for institutions to examine how consumer behaviors are changing, including buying habits, their use of various delivery channels, and preferences for different loans and deposits. They also need to consider operations, including how to manage remote employees, necessary technology, contingency and business continuity plans, and supporting product features and functionality.  Of course, that is like saying the horse has already left the barn and we need to close the door.

Right now, institutions are managing all these areas in crisis mode, but they should also consider how to grow and develop their organizations in the future – continually focusing on providing support for accountholders’ financial needs. In addition, financial institutions should aim to develop stronger emotional connections with accountholders with the goal of expanding relationships.

What to Include in the Strategic Plan

As shown in the graphic below, a good, comprehensive strategic plan takes into account six important components of the institution, as well as factors that impact those components today and throughout the 2020s. From technology to training and from front-line staff to the Board of Directors, the strategic plan should encompass the entire enterprise. In this blog post, we focus on two primary components: technology and operations, and delivery channels.

Strategic Plan Components

Technology and Operations

Currently, technology is being stress tested on the front lines versus in a test environment. While Raddon and our clients have addressed technology as part of the strategic planning process, financial institutions are learning in real time whether their technology is sufficiently robust to meet accountholder needs.  

Institutions should evaluate not only their core account processing systems, but all consumer-facing add-on systems heavily used by accountholders. Institutions must ask themselves, can our existing systems meet the needs of accountholders today and in the future?

Once the frantic pace of pandemic activities subsides, institutions should take a moment to document the lessons learned and redraft business continuity plans. This activity is present throughout all sections of the strategic plan.

Delivery Channels

The recently released Raddon Research Insights study “Branch Transformation: Building for the Next Generation” shows that nearly 70 percent of consumers currently use a branch, drive-up or on-site ATM/ITM regularly (every 90 days). The pandemic will likely expedite consumer usage of mobile and online banking platforms.

However, the study also shows people still want to interact with a human for answering questions, service support and buying products. See the chart below on consumer preferences for conducting banking business.

Source: Raddon Research Insights 2020

Institutions should prepare for a change in branch activities as accountholders look for more consultative services versus day-to-day transactional activities. Among other considerations is whether the branch layout is conducive to these changes. Also, as more consumers – especially younger adults – turn to digital channels, institutions should plan for systems that will enable them to stay current with electronic delivery.

In no way is the strategic planning process in 2020 going to be “business as usual.” As the effects of COVID-19 continue to play out across the world, innovation and flexibility are more important than ever.