Despite market strains caused by the novel coronavirus, providing funds for communities shouldn’t be a major issue for banks, according to Mike McCrary, first vice president of LSBX, Lincoln Savings Bank’s innovation lab.  

Watch LSB’s McCrary in the Zoom webinar below:

“The access to funds should largely be there,” McCrary said during a Zoom event today for Bank Innovation subscribers. “The strength of the banking system is pretty sound right now. This isn’t the financial crisis.” 

The challenge, according to McCrary, will be compressing turnaround times for funding as small businesses and consumers suffer from an economic downturn. 

McCrary said Lincoln Savings Bank, a $1.4-billion asset bank headquartered in Reinbeck, Iowa, is positioned to fund businesses quickly since it is a regional bank with deep knowledge of its community. Because many of the local businesses are multigenerational, McCrary said the bank knows clients’ creditworthiness without extra vetting.   

See also: Startups inspire banks to upgrade CX

Many fintechs, meanwhile, believe they provide a better option to small businesses affected by the pandemic, especially when it comes to speed of funding. Financial Innovation Now, an advocacy group that includes major fintechs like Stripe, Square and PayPal, wrote a letter to Congress last week urging the government to include digital lenders in small business emergency loan relief programs.  

“Millions of truly small businesses, those most likely to fail in the coming weeks, will not be well-served by loan guarantees made available exclusively through financial institutions,” the group wrote. “Alternative online lenders have the reach, relationships, and digital capabilities to reach those businesses most vulnerable — right now.” 

With lower interest rates and a high demand for credit, McCrary said credit analysis will be crucial for banks moving forward. “Our lending decisions are going to have to really be on point,” he said. McCrary added that the coronavirus pandemic has tested banks’ contingency plans and the ability to do business digitally. Automation and efficiency will be “high points of consideration.” 

The long-term effects of a coronavirus-caused economic downturn are hard to pinpoint at this point according to McCrary. He said it wasn’t until a few years after the 2008 financial crisis that consumers started viewing banks negatively, which in turn influenced many current fintech trends like challenger banks

“Banking became a negative term in a lot of ways,” McCrary said. “I don’t think we’re going to have anything like that pointed at banking or finance as a result of this, but certainly there are going to be things people reevaluate and maybe distrust, or even think about differently, and we don’t know what those are.”