“There will always be a business cycle, and white-collar workers will get hit in the next recession like they always do in recessions.”
– Robert Reich, former U.S. Secretary of Labor, economist
Well, they’re sure getting hit now. Just for none of the reasons we ever thought (or ever imagined).
The worldwide coronavirus outbreak tragedy is affecting populations and economies around the world. Much of the U.S. workforce has ground to a standstill, and with The New York Times now estimating the unemployment rate reaching around 13 percent (as of April 3), the labor market is adjusting so quickly official statistics can’t keep up. On April 2, the U.S. Labor Department reported nine million individuals had filed for unemployment in the last two weeks. A healthy economy sees fewer than 500,000 in the same period.
Obviously, no one knows how long this recession is going to last. With so much social and economic uncertainty at play, many individuals and families, particularly those newly-unemployed, face shaky if not treacherous financial futures. As tough and unstable as everything appears right now, one absolute certainty remains – this nation’s credit unions (CUs) are uniquely structured to help communities adjust to their current financial circumstances while providing the guidance and financial assets to see them through this crisis.
COVID-19 is affecting virtually every aspect of American life, yet credit unions have a long history of offering solutions in financial crises. To that end, here is a list of five ways credit unions can lessen the effect of this recession on themselves and, by extension, their communities:
- Take action and be proactive
Whether the recession has already arrived or not, it’s always best to be proactive and put contingencies in place. Planning, taking action, and executing on projects to drive efficiencies prior to a financial downturn is key to CUs not only remaining resilient during the recession, but actually grow through the crisis. Looking into internal operations to streamline operations and improve organizational functions and staff efficiencies is one place to make strategic decisions that may lead to cost reductions.
- Have crisis management teams named and in place already, starting at the top
The credit union’s executive leadership team must be in consistent communication and meeting on a regular basis to update and coordinate responses to both external threats like COVID-19 or internal actions that need to be taken to counter a recession. Credit unions’ CEOs and board members should be communicating consistently. In a show of leadership from the top, CEOs should be consistently communicating with staff, credit union members, and the broader community to keep them informed on how the organization is taking action on the latest information pertaining to the respective crisis.
- Enhance your credit union’s strengths when competitors may pull back
In a recession, many competing financial institutions may retract in various capacities, introducing opportunities for your credit union to take advantage by expanding your organization’s own strengths. Credit unions may consider promoting programs like short-term credit offerings or newer loan programs to their membership in order to weather a storm like the coronavirus pandemic.
- Building and executing a coordinated business continuity plan
Regardless of the crisis, such wide-ranging health threats like COVID-19 will provide a challenge to your credit union’s preparedness to function efficiently on behalf of membership and the larger community. Consistent monitoring of the virus or disease outbreak’s current status, particularly in the credit union’s local area and in cross-reference to the organization’s crisis plan, is essential to staying ahead and staying prepared. From creating a fluid plan, to documenting critical organizational functions, CUNA provides three strong credit union case studies on laying out a thorough business continuity plan.
- Maintaining healthy communication with membership
While we brushed by this point earlier, we believe it deserves its own highlight. It is absolutely imperative to stay in close contact with your membership by communicating any pertinent information on the respective crisis as soon as possible. Keep members informed as to what you’re doing to make sure services are available to help them. Are you going to close individual branch lobbies to ensure social distancing safety policies? Keeping drive-thrus available along with extended call hours? Make sure members are aware of your credit union’s digital banking assets and utilize email and social media channels to communicate what hours tellers are available to them. Turning a branch office closure into a positive opportunity to learn something new, such as helping a member use your mobile app for the first time – if done with a friendly attitude – may go further than you think when it comes to member loyalty.
The QCash Financial staff wishes you continued health and safety in these uncertain times!