By Ruth Razook,Founder & CEO
RLR Management Consulting, Inc.

I think it is unanimous that saying goodbye to 2020 is not a sad thing. I think we all agree that 2020 could not end soon enough…why? Well, not just COVID-19, but the endless impacts that it took on lives lost, families broken, closed businesses and, well – causing a lot of people pain and suffering we thought and hoped we would not see in our lifetime. The pandemic started really impacting our lives in March of 2020, though it first hit in January. I remember it well. I was in Minneapolis speaking at a conference when one of my consultants said, “You should really go home. There is a terrible virus spreading in the Northwest and people are saying it could be really bad”. Well, she was right, and I was glad I did come home.

Fast forward, millions have been infected with the virus and over 400,000 people in the United States have lost their lives, with projections that we don’t even want to talk about. The virus did make it an interesting and somewhat challenging year for the financial services industry. “PPP” loans arrived, and banks rallied to get those loans made to the businesses that needed them. (The SBA states the total program allocation for guaranteed loans through the PPP (for 2020 and 2021) is $806,450,000,000.) Loan forgiveness followed, and again, banks rallied to figure that out. And through it all, banks too were experiencing absenteeism due to the virus, while experiencing the loss of employees, customers and family members.

Additional challenges that we all faced were:

• Working remotely. We at RLR, are accustomed to working remotely. Though we traveled a fair amount before the virus, we have always worked remotely as well. For banks that were not quite prepared, it has presented challenges. Not only with technology and cybersecurity but keeping up the spirit and camaraderie of staff members.
• Determining the consumer’s needs and wants. Consumers have definitely been impacted by the virus and small businesses took the brunt of the hit. Only time will tell how many of those businesses will survive. What products and services should financial institutions be offering to the consumers to address the “new normal”? And do we have the resources to provide those products and services?
• The digital transformation. Some banks were prepared for the digital transformation though many were not. Let’s face it, we now need to be able to provide our products and services remotely and be better at it than our competition. The challenge for Financial Institutions is to figure out what that is, what it looks like, and how it affects our bank. Fintechs rallied in this crisis, delivering products and services that greatly assisted financial institutions. However, are those solutions long term or just enough to get us through this current challenge?
• Regulatory oversight. In speaking with our clients regarding regulatory exams during 2020, we heard that exams went very smoothly. Most, if not all were conducted off-site, and generally, there were not a lot of issues. We wondered whether this was a “light” year for the regulators or whether banks may take this as a new “way of life”. During a recent California Community Bankers Association (CCBN) call with a panel of regulators from the OCC, FDIC, Fed and Department of Financial Protection and Innovation (DFPI), this would not appear to be the case. The regulators, very mindful of the pandemic and how financial institutions have fared, shared that they believe exams will continue to be off site, at least for the first half of 2021 and will continue to perform exams as usual. Priorities for them are:
  • Stress Testing and Capital Planning
  • Cybersecurity, Patch Management, and IT
  • BSA/AML

Specific to banking marijuana, all participating regulators remain in a waiting mode, reviewing the financial institution’s risk profile and risk assessment.

One of RLR’s first projects this year is the opportunity to perform our first merger remotely! We know it will have its challenges, but we are up for the challenge! We will let you know what we learn! Immediately, it is clear that communication will be even more critical than ever!

As we look forward to 2021, it is hard to say what happens! At RLR, our goal is to support our customers, staff, and families. New leadership for the country in a new President, and the democrats took the Senate. What does that all mean for us over the next four (4) years? No one knows. No one has a crystal ball, no one can predict what will truly happen in 2021 and beyond. Stay tuned, as we watch and wait!