Lessons Learned From a Pandemic

The COVID-19 pandemic has radically changed nearly every facet of American day-to-day life to where most citizens do not see our daily routines ever returning to what we once considered “normal.” When we say every facet, we mean every facet. Mental, physical, familial, financial, personal, and professional. A lot of the effects we’ve felt from the pandemic have been less than savory, but this pandemic is also changing some things for the better. Below are just a few life lessons many Americans have learned from this pandemic (so far) regarding banking and finances.

1. Small Businesses Are What Define Our Economic State

Big businesses drive political ideology and are the focus of headlines, but small businesses are really what define the economy. We typically look to the stock market to measure how well the economy is doing, but that’s only accounting for 0.01% of American businesses. There are 30 million businesses in America, and only 4,000 are publicly traded. 99.7% of businesses are small businesses with less than 500 employees. Even though the stock market has regained approximately half its value since dropping in February, the economy is still in not ideal, with record highs in unemployment and tons of businesses closed or severely hurting. The economy will not fully restore until small businesses are able to fully open.¹

2. Big Businesses Are Not Invincible

As mentioned before, politics and media like to look at big business to define the state of the economy. These businesses are seen as failsafes that many rely on in certain capacities. While most large businesses are remaining stable or even growing, this pandemic has revealed that big business are not immune to this economic damage. While they may not be failing, many big businesses are under performing. As Tom Snyder mentions in WRAL TechWire, Amazon Prime packages that normally have a 2-day delivery guarantee are taking weeks to arrive, grocery and home improvement chains cannot keep essential supplies and goods stocked. And in the banking world we saw big banks colossally fail at submitting PPP loan applications for their customers before the funds were exhausted. In round one of PPP, community banks largely outperformed big banks, with 60 percent of PPP loans coming from lenders with less than $10 billion in assets and 20 percent of all loans disbursed coming from banks with less than $1 billion in assets.² Also, more than 200 public companies collected funds through the PPP program³, and large corporations such as J. Crew, J.C. Penney, Gold’s Gym, Hertz car rentals, and many others have filed for bankruptcy since the COVID-19 outbreak.⁴

3. The Importance of an Emergency Fund

This pandemic has shown just how important the need is for an emergency savings account. There are many different approaches to savings and financial planning. Some Americans do have a fully-funded emergency fund to cover 3-6 months of expenses, but many also skimp here and prefer to focus on building wealth through investments. The majority of Americans’ savings aren’t much of anything. 69% of Americans have less than $1,000 in savings, with 45% of those having $0 saved.⁵ Many Americans have viewed an emergency fund as the means to deal with an unexpected car repair or broken water heater. The COVID-19 pandemic has taught Americans just how volatile the economy can be, and how suddenly jobs can be put on the line. No one saw a public health crisis coming, but it certainly puts the definition of an emergency fund in perspective.

4. We Desperately Need Inclusive Banking

The World Bank defines financial inclusion as “individuals and businesses [having] access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.” Those without a bank account are disadvantaged, but especially so during COVID-19. Many have relied on services such as online shopping, grocery pickup, and restaurant delivery to receive goods that they need, but those all require a debit or credit card to use and are therefore unavailable to those in our communities still relying on cash to survive. Many stores are also not accepting cash for fear of further spreading the virus. Cash is as close as it has ever been to being eradicated, but with 55 million unbanked Americans, this won’t be a possibility without financial inclusion.

5. Digital is Critical

COVID-19 has essentially crammed years of technological advancement into a couple of months. The need for digital capabilities in all aspects of life have proven critical during this pandemic. This applies to consumer banking just as much as it does to the workforce. With lobbies closed or extremely limited in services, it’s no surprise that digital traffic has skyrocketed in the wake of the pandemic. Up 10 percent from 2019, the four largest U.S. banks now have 72 percent of customers using their online banking platforms. At Wells Fargo, money deposited using a mobile device increased 81 percent and digital sign-ons have grown 23 percent.⁶

While many things will revert back to a pre-pandemic state, it is believed by many that with some things, there’s no going back. Americans have had experiences throughout this pandemic that will propel and accelerate the future of America. As we must continue to learn, grow, and adapt, we’re grateful that a lot of those changes will be for the better.

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