March 27, 2021 / VOLUME NO. 150
Banking Saves the Day

The banking industry doesn’t have a great reputation. Let’s face it: The fallout from the last financial crisis lingers. Wall Street got bailed out while Main Street got burned out, or so the thinking goes. 

But in contrast to the last financial crisis, the pandemic bolstered bank reputations. With the support of Congress, regulators and the accounting industry, many banks in the United States offered massive deferrals on loans with few questions asked. In Bank Director’s 2021 Risk Survey, which publishes Monday, 97% of respondents reported that their bank modified loans due to Covid-19. The survey also found that most bank directors and C-suite officers believe the pandemic positively impacted their bank’s reputation.
Perhaps it’s no surprise that bankers gave high marks to themselves. But surveys of consumers seem to confirm that. Brand Finance and J.D. Power both found that bank reputations actually improved during the crisis. J.D. Power found overall satisfaction with banks climbed to a record high among small businesses during the pandemic last year, coinciding with the Small Business Administration’s Paycheck Protection Program. 

Good vibes were not equally shared, however. Small businesses with less than $2.5 million in revenue became less satisfied with their banks as they suffered greater hardships, J.D. Power found in an October 2020 survey. Many banks required PPP applicants to have business deposit accounts, which very small businesses and sole proprietorships often lack. 

Overall, banks came out ahead following a tough year. Now, it will be up to them not to squander what they’ve gained. Those that added new customers via PPP need to figure out how to keep them. And banks can continue supporting businesses hurt by a bad virus, not a bad business plan.  

It makes sense right now to look at how your bank’s practices impact consumers, to ensure you bolster your reputation, not hinder it. President Joe Biden’s administration may come down hard on particular bank activities, like overdraft fees. 

Banks proved they were a pillar of fortitude and compassion during the pandemic. Let’s not squander that goodwill. 

• Naomi Snyder, editor at Bank Director
Banks helped struggling borrowers and provided better insight into credit quality after regulators suspended loan modification rules.

“Standing here today, having completed most of my year in audit and having a pretty good idea of how things are panning out — I would call it a raging success.” — Mandi Simpson, Crowe LLP

• Kiah Lau Haslett, managing editor at Bank Director
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