It’s no secret 2020 has pushed banks and credit unions to reexamine how they operate. The pandemic has demanded that they become experts on public health and quickly change how they interact with customers and members. For now, there simply is no price on safety.

While the unique problems of COVID have been getting everyone’s attention, the economic effects of the pandemic have created more familiar—but more complex—challenges for financial institutions.

Banks and credit unions have reacted to these two different problems (health and economic) by assuming they have separate solutions. However, improving operations can enhance both customer/member experience and business performance, improving an institution’s total ROA.

Challenges Ahead for Banks and Credit Unions

As Equips found during our survey of the impact of COVID on banks and credit unions, the current environment is challenging most financial institutions. The health crisis has required many FIs to invest in new equipment to support remote (or socially distant) banking, while the slowing economy has pushed down the performance of loans and debt assets. This combination of new costs and reduced income has hurt ROA and profitability.

It may not be fair to judge such a strange year with a single number like ROA, but there’s always pressure for management to enhance it.

Unfortunately, improving ROA by increasing revenue is a steep challenge with few options. As interest rates drop and fewer people look to borrow, there is a limited market for efficient lending. Additionally, FIs must think about their current loans and the potential of bad debt if the economy remains slow.

Making Up Margin With Your ROA

Because of this environment, banks and credit unions must turn to costs. Whether it’s spending less on equipment or improving staff efficiency, lowering costs (without damaging customer experience) may be the only way to increase ROA.

Equips allows FIs to improve their bottom line, even in a difficult economy. We lower equipment costs and improve office efficiency without disrupting your current operations. You keep your vendors and equipment; we just handle the conversations and negotiate better prices.

But we provide more than just a good deal. Equips allows businesses to advance their COVID strategies. We provide insight on upgrading digital equipment and ensure your critical equipment and services are ready to go. Our simple reporting and monitoring systems reduce downtime and allow employees to focus on their most important work.

As pressure grows to improve—or just maintain—ROA, every bank and credit union should be asking itself: “Could my costs be lower?” Equips can be the answer to that question, helping you to find each bit of ROA.

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