As economies stagnate, MSMEs are bearing the brunt of the pandemic. Twenty percent of MSMEs in China report having enough cash to survive for one month, and 64 percent have enough for just three months. We’re seeing similar numbers across the countries where our members operate.
Although it’s too early to present the perfect solution, we’ve seen clear elements of a successful response plan emerge during the first four sessions of our special “Ask The Expert: Business in Times of Crisis” series. These elements revolve around three main stakeholder groups: employees, customers and the communities they serve.
Some members were already dealing with crisis before the pandemic. Westpac, for example, had a crisis response system set up for the tragic Australian bush fires that raged for months and tore through customers’ homes and lives. By the end of December, its disaster relief packages were fully ramped up so in January, the bank was working at full speed and hoping to wind things down by the end of February. The bank has also had a Women’s Market Program in place for more than 20 years, and in the past four years, it has honed-in on supporting people during pivotal life moments. These core capabilities are exactly what’s needed in times like these.
For all, ensuring employees’ health and well-being was one of their first responses. For RBS, that involved making sure that vulnerable colleagues were at home; setting a robust operating rhythm so that folks used to a structured timetable could adjust easily; and ramping up technology availability and support so that remote work was seamless. Banco Pichincha set up an employee dashboard to monitor in real-time employees’ safety and absenteeism.
Institutions also sought to protect employee livelihood since guaranteeing compensation settles anxiety and enables a focus on the customer. RBS, for example, gave everyone a six-month pay guarantee. For the salesforce at Banco Pichincha, who operates mainly on variable pay, the bank guaranteed 50 percent of variable salaries for an average of six months.
In addition, banks ramped up their internal communications significantly, which required strong platforms. Banco Pichincha used Workplace, for example, and RBS launched a WellBeing Hub for employees. Westpac also ensured its employees were aware of mental health and other kinds of support on a confidential basis.
Some also recognized and acknowledged that the pressures of working from home would escalate domestic abuse. We’ll learn more their response to that situation during our next “Ask the Expert: Business in Times of Crisis session, focusing on domestic violence, on May 7 at 8 am EST. To register, click here.
Both employee and customer health is a primary focus for all, and Banco Pichincha has a put a protocol in place for employees to follow if they think they are infected. This starts with access to doctors and continues in various ways depending on the situation. Pichincha also doubled down on its company health insurance expanding benefits such as online medical visits and communicated it through their Workplace platform. In addition to medical support, Westpac is giving extra leave to people should they require it for home schooling, volunteering at hospitals, etc.
Branch staff and customers obviously need protection, and all banks in the “Ask the Expert: Business Response in Times of Crisis” series have put in place social distancing measures. They include ensuring customers can stay two meters apart, screens for cashiers, and staff training to ensure safe meetings with customers. Westpac also mentioned that it’s monitoring employee’s temperatures at customer call centers and headquarters. They’ve also introduced daily hospital-quality cleanings on frequent use premises.
The banks have also introduced special supports for their most vulnerable customers. RBS created a dedicated contact line for people over 70 who have been asked to isolate at home and is also pro-actively calling them to make sure they are ok. When needed, RBS connects them to the National Health Service or Social Services. The bank also gives special support to National Health Service staff, as well as cash delivery services to the homes of healthcare workers and vulnerable customers. Banco Nacional has adjusted branch opening times to allow retirees to visit branches, if needed, at a specific time.
All banks have put in place comprehensive customer support packages broadly segmented by consumers and MSMEs. They include a full range of loan restructuring options, such as repayment holidays and tenor extensions; reduced interest rates; more lenient financing conditions; freezing overdraft interest rates for a specific period of time; and removing all other fees, including all online and mobile usage and late credit card payment fees.
We’re also seeing a trend of encouraging savings. Banco Pichincha is focusing on the growth of savings stock and term renewals through digital account opening, and Westpac is launching a special term deposit offer for 12 months to provide customers a higher return on their savings. For clients aged 65 years and over, the rate is even higher for eight months.
For SMEs, bank are the main distributors of government support packages. In both the UK and Australia, the government has created relief loans: The Coronavirus Business Interruption Loan Scheme (CBILS) in the UK and the Coronavirus SME Guarantee Scheme in Australia. Both members are actively engaging in these schemes, with RBS approving more applications than any other bank in the UK starting with amounts as low as £5,000 and without taking personal guarantees.
Banks are also offering some form of loan amelioration, such as moratoriums or repayment holidays, for business loans and personal or housing loans. The most common practice is to grant clients a three-month deferred payment (RBS, Banco Pichincha, Westpac) or four-month (Banco Nacional) to alleviate cash-flow constraints. Interestingly, both Banco Pichincha and Banco Nacional have also introduced an opt-out approach with clients where-by this is automatically given, unless the customers decide they don’t want it, in which case they can opt-out. Banco Nacional has also given medium sized businesses in the tourism sector, which is so important to the national economy but is shut down, an option for a 3 – 9 month deferred payment.
Across all the banks there’s been an uptake in digital financial services, and the banks are offering support to customers to get them using digital channels. RBS is putting a particular emphasis on supporting people over 70. Westpac has seen similar trends and has launched a number of communications campaigns to support customers’ migration to digital. Banks have also reduced or removed completely their transaction fees for digital and are seeing this migration as an opportunity going forward.
All of the banks in our COVID-19 series already had a strong non-financial services value proposition. But we’re seeing a migration also to virtual support through webinars, portals and one-on-one access to relationship managers.
Content has also shifted to include topics such as business survival strategies, cashflow management, pivoting the business, digital literacy—selling on the internet and talent management. Westpac developed a financial literacy model with bespoke content for COVID-19. The bank developed its SME planning guide within days of the lockdown period and created a cost-cutting check list to help consumers.
Westpac is also helping women take advantage of asset write-offs and government depreciation changes. Banco Nacional is offering to the general public a six-month free membership to its digital training platform, which is usually limited to its SME clients. The platform has 5,000 regular users with 1,800 new users coming on board in the past couple of months. The bank also launched an eCommerce platform called NIDI, that enables SMEs free and immediate access to sell on the internet. The portal enables businesses to show their products, control their inventory, conduct the sales transaction, generate CRM and is integrated on Facebook and other social media. Launched in April, the plan is to support in the new normal. Banco Nacional also have a platform—Nova Pyme—that enables SMEs to access factoring, again offered at no cost for 6 months.
Banks are also seeking to maintain constant and transparent communication with clients. To ensure this, they’ve needed to massively increase their call center capacities to deal with exceptionally high volumes of requests. RBS, for example, has had to double its call center capacity.
The CSR response has similarly been robust, with banks putting in place significant donation mechanisms for staff with matching funds and also for their customers. RBS is also using its HQ in Edinburgh as a food bank distribution hub for Social Bite and Trussell Trust charities.
In all cases, strong communications from the CEO have been important, and “walking the talk” has never been more relevant. Alison Rose CEO of RBS, is for example, donating 25 percent of her annual salary to the charities RBS is supporting through this crisis.
Many of the banks have also adapted their marketing campaigns. Banco Nacional, for instance, launched a national campaign focused on “Together, we will achieve” to motivate the population at large, and also to encourage social distancing and use of mobile channels. Through its social media channels, BN Mujer, the bank’s women-focused program, has developed live programming to support women during the COVID crisis.
The sentiment is certainly that the banks are part of the front line, and the capabilities built to serve women are standing them in good stead.
We invite you to watch the full video recordings of these weekly “Ask The Expert: Business in Times of Crisis” sessions that take place each Thursday and to register for the upcoming sessions.
Upcoming sessions include: