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  • Jim McAveeney, Leadership |

The economic fallout due to COVID-19 has led to overwhelming requests for stimulus aid such as the Paycheck Protection Program (PPP), Main Street Expanded Loan Facility (MSELF), and Forbearance programs. Many banks have struggled to respond to these increased demands for assistance while they executed their own business continuity plans. KPMG recognized the need in the market and quickly responded with an offer to our banking clients of a well-trained ‘virtual work force’ to assist in the response. We have placed 2,000+ resources with our clients and have helped both the banks, and their small business clients, to obtain the much needed liquidity to continue to pay their staff and business expenses.

Over the next few months, I anticipate there will be a second wave of demand for PPP forgiveness calculations, forbearance extensions or conversions to loan modifications. The demand for these programs has already diverted banks’ resources and reduced their capacity to address risk and regulatory requirements. These challenges are further complicated by two key issues:

  • The impact of new programs on existing processes and regulatory obligations (such as CRA, Fair Lending and UDAAP) is not well understood.
  • Understanding of banks’ regulatory obligations relating to new programs depends on guidance from the Treasury and Federal Government, and this guidance is evolving.

As a result, banks are finding ways to ramp up monitoring and testing to ensure that they adhere to policy and regulatory requirements, and they are developing essential training and communication materials that will help their workers better respond to these changing demands. COVID-19 has also forced financial institutions to adopt virtual or remote working, and they are implementing the technology solutions, as well as the security and privacy protocols, that make this possible.

I expect that many financial institutions, as they move beyond actual crisis response and into resilience and ultimately the ‘New Reality’, will re-evaluate their business models with careful assessment of core versus critical capabilities. I believe that this will drive a greater strategic response, particularly among executives who may have been reluctant to consider managed service/outsource options prior to the pandemic. While some institutions may have been pushed by circumstances towards new ways of doing business, managed services that provide digital transformations can also lead to positive outcomes. New combinations of talent and technology offer an opportunity for banks to deliver the exceptional customer experiences that drive long-term value and growth.

When the economy stabilizes and the recovery is underway, financial institutions are expected to take stock of the possibilities raised by new technologies, changing consumer expectations and, above all, the new ways of living and working that will emerge in our post-COVID-19 societies. I expect to see significantly more executive interest in outsourcing services and capabilities.

There is a light at the end of the tunnel, and by rethinking their business models, and pivoting towards new ideas for the future, banks could accelerate their recovery and growth out of these uncertain times.

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