Providing banking confidence in a world of Delta variant uncertainty
Photo: Courtesy of the Massachusetts Association of Bankers
Kathleen Murphy, president and CEO of the Massachusetts Association of Bankers
As businesses recover from the impact of the COVID pandemic, the threat of the Delta variant still looms on the horizon. While the banking industry maintained stability throughout the pandemic, the question that remains is whether financial institutions can withstand another crisis situation.
“The fear is if we have the Delta variant, we will have to go to that reserve position again, to that protective position,” said Thomas Bartholomew, CEO and president of Worcester wealth management company Bartholomew & Co. Inc.
During the start of COVID, banking institutions reserved vast amounts of capital to cushion the financial blow of the pandemic, according to Bartholomew. However, banks did not lose as much capital as they had anticipated, which allowed them to quickly recover.
Worst-case scenario is the Delta variant would interrupt basic trickle-down economics, leaving banks unable to lend and businesses unable to access sustaining capital. However, this is not a situation Bartholomew sees unfolding any time soon.
While the new public health hazard is serious, Bartholomew believes banks are monitoring the situation but taking it in stride and adapting their policies to prioritize safety.
Current development projects throughout Worcester are a positive sign lending services are strong, from his vantage point. Financial institutions are funding restaurants throughout the city, while the Worcester Red Sox’s new Polar Park has bolstered economic energy.
But despite Bartholomew’s positive outlook on the banking industry, he recognizes that banks need to work hard to give their clients the same level of confidence in banking that he has.
“Communicating that they are healthy, that they are available for lending, and that they are open for business is important,” he said.
Banks had so much capital reserved that some financial institutions were able to increase dividend rates and buy back stock, for example.
“Their balance sheets are done well. They are healthy not just in the short term, but in the long term,” Bartholomew said.
Massachusetts Bankers Association
Kathleen Murphy, president and CEO of Massachusetts Bankers Association, refers to her membering banks as the economic first responders of the COVID pandemic.
Unlike the banking crisis and recession of 2008-2011, Murphy believes technology played a huge role in providing customers with ubiquitous access to banking services throughout the lockdowns.
“Technology was the great equalizer,” she said.
While capital is typically set aside for a rainy day, Murphy said banks were in such a stable and high capital position, they were able to turn their focus towards helping the consumers.
Launched in April 2020, the U.S. Small Business Administration’s Paycheck Protection Program is an example of this capital in action, as more than $21 billion dollars in loans were distributed to small businesses throughout the state.
The Massachusetts Bankers Association saw significant improvement in banks who were willing to accept forbearances from consumers who faced economic hardships as a result of the pandemic.
Like any other industry, the state’s banks are also keeping an eye on increasing coronavirus cases and hospitalizations from a workforce safety perspective.
In an internal survey, the Massachusetts Bankers Association asked members about their stances on mask requirements, vaccine mandates, and working from home as COVID cases start to rise again in light of the Delta variant.
According to Murphy, 50% of banks are not changing their current policies, while 40% of bank members will potentially update their mask policies.
Masks for unvaccinated workers are required at most institutions polled. The majority of member banks encourage COVID vaccinations through contests and perks such as additional time off, but only two banks have fully mandated vaccinations at their branches.
“There are over 120 banks in the state, so there is no one-size-fits-all approach,” she said.
The goal, at the moment, is to continue monitoring the current situation with the Delta variant in order to make prudent decisions to ensure employee and client safety, according to Murphy.
“The industry is in really good shape,” she said.
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