Over the course of a generation, personal computers have changed from a niche hobbyist purchase to a mainstay in homes across the country. Advances in technology have made these products increasingly powerful, cheaper and more intuitive to use. Most people now carry a phone that makes the first mass market computers look like relics fit for a museum.

But technology hasn’t just made ordering new bedsheets online oh-so-convenient. It undergirds the entire economy, facilitating processes and enhancing efficiencies in every sector. When the pandemic radically changed how businesses could function in-person, technology stepped into the breach — and the banking sector was no exception.

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“Chase has nearly 57 million digitally active customers, which is up about 10% year-over-year, and roughly 43 million active mobile users right now, which is up a good 10%, too,” notes Scott Lewis, regional director of banking for the southwest region at JPMorgan Chase. “Even though the branch doors have been open, the convenience of being able to do so much on a phone has been exciting as we’ve gone through this.”

Like many industries, the public health emergency caused by COVID-19 required banks to adapt their operation to meet the needs of retail and commercial customers. Here are some ways banks pivoted to confront the crisis while providing excellent service, and what lasting effects COVID-19 may have on the industry.

Commercial technology

The public health crisis upended the status quo practically overnight. “In these unprecedented times” became something of a catch phrase as industries tried to adapt to work-from-home arrangements where feasible and ensure essential personnel were provided proper protection. It was anything but business as usual.

“We saw a huge shift away from cash and checks, which made it harder to send and receive payments,” says Teri Wagner, Arizona treasury management leader for Wells Fargo. “From day one when COVID hit, we had many local customers reach out asking how to pay vendors with a lack of employees in the office. Given our long-term relationships, we understood their processes from an accounts payable and receivable perspective, which allowed us to quickly identify their specific needs to ensure we were providing solutions to them that fit within the organization.”

Some of these fixes included migrating from paper to electronic transactions and leveraging integrated payables and receivables programs to automate those processes. As the pandemic progressed, however, the needs of clients started to change.

“What we were talking about 18 months ago is much different than what our customers are talking about today. But we’re thinking about how we can use everything we’ve learned over the last 18 months to help our customers be stronger by leveraging technology and automation,” Wagner notes.

One of the lasting impacts of the pandemic has been what Wagner describes as a digital transformation. “Pre-COVID the adoption of technology was pretty fragmented, but it has ballooned into this complete transformation of how money flows,” she says. “On the commercial side, the fundamental idea of what a bank even is, what it does and what customers expect is completely changing. The pandemic has proven that we’ve reached a tipping point.”

Wagner explains that some of products that are currently available will be built upon to create greater efficiencies for customers. For example, businesses want the ability to make payments on demand and get real-time updates on the availability of their funds. Wires, same-day Automatic Clearing House (ACH) push-to-card processing and real-time payment networks are making it easier for companies to control the flow of money coming in to and out of accounts.

“I think we’ll see the demand for real-time payment solutions from our corporate clients increase,” Wagner argues. “The use of paper invoices will continue to decline, and I think retailers will continue to encourage cashless payments.” The Federal Reserve reports that commercial check volume fell 14.2% to 3.7 billion in 2020. A decade earlier, 7.7 billion commercial checks were collected by the Federal Reserve.

Neal Crapo, executive vice president for the Southwest at Wells Fargo, provides an example: “Say a client needs to clear 10,000 payments a month. How do you do that most efficiently? Historically, money wires were sort of a fad because it’s real money and only takes a couple hours. That’s a more expensive mechanism when you have more volume,” he explains. “The ACH lets you send one file containing 1,000 payments, but generally speaking it’s going to show up in those 1,000 accounts in a day or two. Real-time payments allow you to make those funds available immediately.”

Adds Wagner, “When we look at real-payments and what’s coming, we’re talking about 24/7 availability, whereas a lot of legacy payments — even electronic payments — still have specific cut off times for when their payment rails function. Not only will people get money instantly, but they’ll be able to receive it on the weekend or at midnight. That will change how both the commercial and consumer sides do business. It’s going to be huge for customers.”

Rob Schwister, Arizona market president for Alerus.

Retail banks

The ability for individuals to manage their finances using online tools isn’t a particularly new technology, but some folks preferred to do most of their banking at a branch. After the onset of the pandemic, however, more customers were pushed toward digital options because of reduced capacity at branches and a reluctance to go out in public.

“I’ve been with Wells Fargo for more than 30 years. COVID-19 clearly made us change our business model, but our branch banking network is always evolving,” says Lisa Riley, region bank president at Wells Fargo. “Branches continue to be important for customers, but the reality is we’ve seen a switch prior to COVID with customer preferences. More customers are using digital options. Though I think the pandemic made more customers aware of digital options and made them more willing to try it than in the past.”

Lewis notes that Chase conducted a study at the end of 2020 to measure the online banking features customers wanted in light of COVID-19. “We found that things like fraud alert, electronic bill pay and mobile deposits were considered most important,” he says. “Customers now use Chase QuickDeposit, our mobile deposit feature, for 40% of their check deposits, up from 30% before COVID-19.”

Alerus Financial noticed a trend of customers gravitating toward digital tools even after the initial pandemic constraints loosened.

“Prior to the pandemic, most account openings were conducted in person. We quickly adapted our process to accommodate the remote environment of the time and now, although our locations are open, most accounts continue to be opened online,” comments Rob Schwister, Phoenix metro market president at Alerus.

According to Lewis, about 54% of Chase customers agree that they use the digital banking tools more now due to the pandemic that they ever did before, adding that half of new digitally active customers are older than 50.

“You’ve got a huge population of Baby Boomers who maybe weren’t embracing digital that are now,” says Jeff Friesen, president of the southwest region at Enterprise Bank & Trust. “The ones who embraced it are figuring out ways to do even more.”

Friesen mentions that the bank’s personal finance tool, which links different investment accounts, budgets and debts to the customer’s bank account, saw increased usage since the beginning of COVID. The pandemic also caused increased utilization of ITMs, or interactive teller machines, at the bank’s branches.

“It’s basically an ATM, but it has a video terminal,” Friesen explains. “Having that personal contact over a video versus being physically in front of somebody was embraced by customers. People still want to talk face-to-face with their financial advisors.”

The future of branch banking

With the pandemic making online banking options more attractive, the question is whether people return to their old habits once the public health crisis fully recedes. Riley doesn’t think that’ll be the case. She recalls that early in her career, teller lines that stretched to the door were common, but online banking and ATMs have led to fewer people coming inside the branch to make a deposit or withdraw cash.

“When I was growing up, when you went to the gas station, somebody would pump your gas. We’re not going to go back to that,” Riley contends. “And we wouldn’t go back to not having mobile deposit or bill pay. Technology moves forward. Our responsibility is to educate customers about the convenient ways that they can do these transactions but also to make sure we understand their financial needs, so that we’re there for more complex advice and guidance.”

“The trend toward online banking was already occurring. The pandemic just sped certain aspects up,” Schwister maintains. “As a result, we’ll continue to see bank branches getting smaller and the purpose of the physical locations shift away from daily transactions to providing more personalized service and advice. Clients can do most of their daily banking online, but they aren’t able to get strategic advice and guidance to help them with long-term decisions from the click of a button.”

Friesen concludes, “Coming in to pull cash out is a dying transaction because the utilization of cash is dying. That was happening before COVID, but it was accelerated because of it.”