I’ve always enjoyed being a banker, helping businesses and individuals obtain the financial services they need to grow and prosper.
But I’ve never been prouder of my industry than over the past few weeks as I’ve witnessed firsthand the response of financial institutions to the COVID-19 pandemic.
As noted recently by Anat Bird, a former bank executive and one of the industry’s leading consultants, financial institutions don’t always do a good job of explaining the critical role we play in the economy.
In ordinary times, we put idle funds to work and create a multiplier effect that ripples through communities to expand individual wealth and help businesses grow and create jobs. But in times of crisis, the importance of banking services is even more starkly evident.
It is almost astonishing that, thanks to some 5,000 banks across the country, nearly $350 billion in Paycheck Protection Program funding was allocated to small businesses in a matter of days. While not without its challenges, banks had the systems and expertise in place to evaluate and process hundreds of thousands of applications and get the money to businesses desperate to save jobs.
It would have been impossible for any government agency or any other industry to move so quickly. In fact, the process was so rapid and efficient that the funding was depleted much faster than policymakers expected.
Howard Headlee, CEO and president of the Utah Bankers Association, noted that Utah banks processed 21,257 Paycheck Protection Program loans totaling $3.7 billion, which is disproportionately high for a state with our population. About 18,000 additional Utah small businesses applied for Paycheck Protection Program loans, but will have to wait for Congress to approve another round of funding, which will hopefully happen this week.
Banks continue working around the clock to ensure that when additional funding is appropriated, banks will be ready to submit all applications that didn’t make it through the first round. This rapid response will help Utah’s economy recover as quickly as possible.
Headlee noted that one reason banks have been effective is that they came into the crisis with historic high levels of capital and liquidity. “That acts as a huge private sector shock absorber to the economic crisis.”
He said that most people don’t realize that banks have funded the initial $350 billion in Paycheck Protection Program loans with their own liquidity, their own money. Funds will flow from the U.S. Treasury some eight to 10 weeks later, once businesses pay employees and transactions are documented.
“It has been a herculean feat,” Headlee said, “and the decentralized U.S. banking system made it possible.” That money is being invested in communities, he said, where it will be multiplied many times.
The old stereotype of banks being staid, slow and cautious, keeping 9 to 5 office hours, has been upended in the current environment. Many banks, mine included, have reorganized staff to work in round-the-clock shifts to process applications for the Paycheck Protection Program and other relief programs. It has required innovation and agility to deliver funds to restart the economy and support badly damaged small businesses.
And we have provided full banking services while dealing with COVID-19 dangers ourselves by practicing social distancing and following proper sanitation protocols. Our first priority is keeping employees and customers safe.
Clearly, Utah’s banks have been put to the test. But I believe the industry has risen to the occasion with incredibly hard work and remarkable nimbleness.
Thomas Morgan, Zions Bank executive vice president and director of retail, business and channel banking, has been instrumental in our crisis response. He noted, “If businesses are the heartbeat of the American economy, then financial institutions are the arteries supplying the blood flow. Money may not be the most important thing in life, but credit, cash management and payment technology provide life blood to a market economy, especially in this economic crisis.”
Anat Bird said, “Our business is making people’s dreams come true.” Even in this time of crisis, we are committed to that mission.
A. Scott Anderson is CEO and president of Zions Bank.