We all know that how we work and where we work has changed substantially over the past eight months in the virus economy. And we understand, but don't yet know how, those changes could continue for decades to come.
National banking firm Jack Henry & Associates has given us a glimpse at the future of the banking and financial industry in a new white paper that outlines how the pandemic could transform financial institutions and their relationships with customers.
"The changes caused by the events of 2020 will offer both challenges and opportunities to lenders across the country and will influence the preferences of the consumers and business owners they serve," the opening of the report says.
The firm highlights five key areas that will be transformed by covid-19:
• Digital products and services will continue to increase. Banks have closed branch offices and shut down lobbies during the pandemic, leading customers to increasingly rely on digital delivery of banking products. Digital lending has been accelerated "by at least five years from the trajectory it was on prior to March," the report said.
• Consumer loan demand is shifting from non-mortgage loans to mortgage loans as low-interest rates bring more homebuyers into the market and drive refinancing. The study notes that housing and home-improvement loans are flourishing while demand for auto loans is decreasing. Consumer loan delinquencies are predicted to increase as the pandemic lingers.
• Business loans are shifting to a reliance on products offered by the Small Business Administration, especially from service-sector businesses ravaged by covid-19. Businesses also have an increasing need for short-term working capital and the report projects that trend to continue with increasing reliance on working capital lines of credit.
• Underwriting will become more forward-looking rather than being based on historical financial performance. Lenders will take a more active role in continuously communicating with borrowers to determine how they're weathering the pandemic.
• Creating more meaningful experiences for customers and employees will become increasingly more important. As digital technology becomes more prevalent, retaining the human touch is critical. "Of course, the best financial technology strengthens human interaction during the process of fulfilling transactions," the report says. "When done right, this practice creates happier employees and satisfied customers."
Looks like we could be in store for a continuing transformation in the lender-customer relationship.
RURAL ENTREPRENEURSHIP
The Conductor, an entrepreneurial support organization based in Conway, is getting federal support to begin a new business program to support rural entrepreneurs affected by the pandemic.
The Conductor will provide technical assistance workshops and individual coaching for entrepreneurs, in addition to creating a rural mentor network, through a partnership with Main Street Arkansas.
The program will be funded by a rural development grant from the U.S. Department of Agriculture.
The initiative, called Level Up, will be a free program open to entrepreneurs and community leaders in 10 counties: Conway, Perry, Johnson, Lonoke, Logan, Cleburne, Van Buren, Pope, Yell and White.
"Downtown businesses have been hit especially hard due to covid-19," Tiffany Henry, director of entrepreneurial communities at the Conductor, said in a statement.
Level Up will target rural entrepreneurs and communities for specialized assistance and support. The program will use the Main Street Four-Point Approach in its technical assistance.
The approach focuses on organization, promotion, design and economic vitality, and these points will be used to help entrepreneurs develop strategies for increasing small business activity.
SBA LOANS
Small nonfarm businesses in four Arkansas counties are now eligible to apply for low interest federal disaster loans from the U.S. Small Business Administration.
The loans offset economic losses because of reduced revenue caused by drought in Benton, Carroll, Madison and Washington counties.
"SBA eligibility covers both the economic impacts on businesses dependent on farmers and ranchers that have suffered agricultural production losses caused by the disaster, and businesses directly impacted by the disaster," Tanya Garfield with the Small Business Administration said.
Businesses of any size can apply for Economic Injury Disaster Loans of up to $2 million. The deadline is June 16, and more information is available at sba.gov.
CHAMBER MEETING
The Arkansas State Chamber of Commerce/Associated Industries of Arkansas will hold its 92nd annual meeting at 11 a.m. Tuesday. The meeting will be held in the Wally Allen Ballroom of the Statehouse Convention Center in downtown Little Rock and a virtual live stream will be available.
Gov. Asa Hutchinson will begin the program with a state update.
Keynote speaker Rob Engstrom, the American Bankers Association's chief political strategist, will discuss last week's election outcomes from a national perspective.
The cost for a virtual ticket is $52 per person at arkansasstatechamber.com.
SOTHEBY'S CONNECTION
Capital Sotheby's International Realty of Little Rock, formerly Desselle Real Estate, has joined the Sotheby's International Realty network.
The network includes 1,000 offices in 71 countries and territories with sales volume of $114 billion.
"Recognized nationally as one of the top 100 places to live in the United States, Central Arkansas is an attractive destination for those looking for a home and environment that matches their live, work and play lifestyles," said Susan Desselle. "Our affiliation with Sotheby's International Realty enables us to deliver the best experience possible and provide Central Arkansas homeowners with the world's most exceptional platform for advertising and marketing real estate."
Capital Sotheby's has 14 years of experience and 12 sales associates serving Little Rock, Central Arkansas and the surrounding region.
Column ideas or recommendations? Thoughts or musings that need pursuing? Contact me at amoreau@adgnewsroom.com or at 501-378-3567.