Coronavirus, Quarantine, and Community FIs
In a December 2019 article, DaLand CUSO’s Jon Ungerland said, “It’s relatively easy to envision a future where consumers become aware of a haunting void; a not-so-distant past where we escaped from Netflix and NFL to spend our weekends touching physical objects and envisioning better versions of ourselves in dressing room mirrors!”
Admittedly, when I first read this, I was not expecting that just a few months later, the coronavirus would force professional sports seasons to be postponed and most of us would self-quarantine at the mercy of Netflix for entertainment. Yet, here we are. While we expect to see a flood of commerce returning to restaurants and shops once the threat of the virus has been contained, the aftershocks of the global economy grinding to a halt may rattle our local economies for months or years to come.
Since 2008, FIs have operated on razor thin margins, with interest rates hovering at historic lows for the past 12 years. Loans have been cheap for consumers, which has translated to reduced margins for FIs. Deposits have been difficult to obtain/retain because traditional financial institutions haven’t been able to pay competitively on deposits, which means costs of both inventory and goods sold have proven problematic for our clients.
To offset these realities, many credit unions rely on fees from money movement, transaction processing, etc., to supplement and support their business models and balance sheets. It’s simple: Money has to move in order for the gears of our economic machine to be greased. If the grease stops moving from gear to gear, the whole machine grinds to a halt and breaks down. Reduction in travel, eating out, and non-essential shopping slows the movement of money and results in decreasing revenues for businesses, communities, and employees.
As the coronavirus causes this global drift further into unchartered territories, central banks and governments are exploring unproven and unfamiliar tools to “stimulate” global economies fueled by fiat currencies. The probable result is even cheaper money and departure from historical (and sacrosanct) norms of banking and financial services.
Long mindful of these trends, DaLand CUSO has been intentional about helping our credit union partners to reduce their exposure third-party vendors, regain control of their data, and control the end-to-end delivery of the user experience. The solution here is not to cut back products and services, but to embrace a strategy that allows you to cut your technology expense, offer a more relevant digital experience, and turn your technology investments into revenue centers for your CU so that your CU does not need to rely on interest income, fees, and transaction processing for revenue.
Whether we are guiding our client partners through critical and complex projects, leading them into a future where they can digitally capture deposits and originate loans without costly and clunky third-party platforms, deploying full-spectrum self-service solutions to support an array of instrument exchanges and operations with minimal staff, or innovating in the space of digital/cryptocurrency storage and local merchant relationships, DaLand’s mission is always strategic partnership towards the sustained relevance of our clients and the thriving of community financial institutions in a wildly changing financial landscape.