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Utah Business

This month Utah Business partnered with Holland & Hart to host a roundtable event featuring finance industry leaders to discuss fintech innovations, the CARES Act, and our forecast into 2021.

A conversation with finance industry leaders

This month Utah Business partnered with Holland & Hart to host a roundtable event featuring finance industry leaders to discuss fintech innovations, the CARES Act, and our forecast into 2021. Moderated by Representative Robert Spendlove of the Utah House of Representatives, here are a few highlights from the event. 

How has the pandemic impacted your business?

Kate Moss | Market Manager | Bank of America

With approximately 200,000 employees globally, we were able to switch to mostly remote for all but our frontline workers. And were able to do that in about two weeks and 90 percent of our workforce ended up working from home with the exception of the financial center employees who are still working in-person.

Howard Headlee | President | Utah Bankers Association

The banking industry has been preparing for this event for decades. As an association, we support all of our members in preparing for these types of events. Whether it’s a pandemic, an earthquake, or a storm we recognize that banks have to be there for their customers in good times and bad. It’s not an option. So, we all have extensive plans in place and it was impressive to watch those plans go into action.

Ramez Halteh | SVP, Business Banking Utah Sales Leader | KeyBank

We had plans to go virtual a little bit more, I think this accelerated our plans. Even in our retail branches, when we had really scaled down during the initial outbreak, we were taking calls from home, helping overflow. We looked at this as an opportunity to help. If you think about 2008, 2009, people were blaming banks. Now [we] thought, this is our time to come through for our clients. 

Reed Wellman | SVP, Product Development at XTRAC Solutions | Fidelity Investments

COVID-19 has challenged our previous beliefs on just how long we really need to hire and train employees. Fidelity Investments recently accelerated the hiring of 2,000 new employees across the United States in spring of 2020, including 200 here in Utah. In March, we mobilized over 90 percent of our 45,000 employees to work remotely within only a few days. COVID-19 has shown us that many jobs can be done from anywhere and that productivity is not bound between traditional 8am-5pm working hours.

Nate R. Callister | EVP, Head of Utah Commercial Banking | Wells Fargo

Despite the difficult circumstances, I see three silver linings that have positively influenced the business. First, we moved quickly to digitize processes for our customers, such as moving to e-signatures and digital on-boarding, which ultimately makes it easier for customers to do business with us. Secondly, Wells Fargo has stepped up to create new resources, including the Small Business Resource Center, which is a free site that helps business owners by providing concrete advice and action items. Lastly, working remotely and in this pandemic environment has had some unexpectedly positive impacts on how we analyze risk trends differently and more effectively.

What do you see happening in the longer-term moving forward?

Darryle Rude | Chief Examiner | Utah Department of Financial Institutions

Some of our remote institutions, we’ve realized, we can do the jobs remotely. I think we’ll get back to onsite visitations but it’ll be kind of a hybrid model where we will utilize technology.

Brock Blake | Cofounder & CEO | Lendio

Obviously during the pandemic, [fewer people were] going into branches. It requires more digital interactions with your customer. During the PPP program, we actually onboarded a little over 200 banks and credit unions across the country onto our online digital PPP loan application. And since then, we’ve seen financial institutions across the country say, “We would like to be able to support from a lending perspective and account opening perspective and other things, all of our customers in a digital way.” So, the customer can choose. If they want to go to the branch, they can. But otherwise, they can do it all online or from their mobile phone.

How does this recession compare to what you’ve gone through and how is it different than past ones?

Frank Pignanelli | Executive Director | National Association of Industrial Bankers and the Utah Association of Financial Services

When I was serving in the legislature, we went through the savings and loan crisis of the ‘80s. What I like about this [crisis] is the banks aren’t getting blamed for it, which is nice.  The thing more important about this particular recession is that we’re viewed as part of the solution, whether it’s through PPP funding or the ability to push credit out, things like that. The banks were part of the solution of rebuilding the economy and that there’ll be a good thing.

Howard Headlee | President | Utah Bankers Association

Banks came into this crisis in probably the strongest position we’ve ever been in from capital liquidity and just overall preparedness. I think we all look at the PPP program and then the thousands of jobs that we were able to save and the stability that brought into the economy. But I think what a lot of people don’t understand is really none of that funding that was approved by Congress has begun to flow. The PPP program was and is being financed and floated off of our bank balance sheets. So I’m impressed that when Congress decided they wanted to go out and get to the market and inject stimulus into the market, they chose to do so through the banking system.

The CARES Act is the main part of the federal response. What have been the successes and what have been the failures of The CARES Act?

Reed Wellman | SVP, Product Development at XTRAC Solutions | Fidelity Investments

The CARES Act was a critical step to help the millions of workers who were affected by the pandemic’s sudden impact on the US economy. By early April, 98 percent of Fidelity Investments’ workplace clients had adopted the CARES Act distribution provisions, which allowed their employees to tap their savings to cover financial needs related to the economic downturn. 

As of the end of Q2, 711,000 individuals had taken a CARES Act distribution from their retirement account, which represents three percent of eligible employees on Fidelity Investments’ workplace savings platform. The overall average withdrawal amount was $12,100, while the median withdrawal amount was $4,800.

Brock Blake | Cofounder & CEO | Lendio

I think that the PPP program was a great success. I mean, there were a lot of hurdles along the way and some pain, but we helped over 114,000 businesses get PPP loans for about $8 billion dollars during those few months. 

I saw a stat this morning on Yelp, there were over 163,000 businesses that have been closed during the pandemic. Sixty-one percent of those are closed permanently, over 88 percent of businesses have already gone through all their PPP money and are desperately needing a second [round of funding] because they’re still under quarantine and consumers can’t frequent their retail or Main Street business. And, so I think a second stimulus package needs to be passed and it needs to happen quickly.

The other aspect is [loan] forgiveness. There’s so much uncertainty around forgiveness, and there’s no clarity. 

David Stahl | Managing Director & Market Leader | Hillcrest Bank

I think [the Main Street lending program] has gotten off to a really slow start. If you think about PPP, they just pushed it out. They approved it, pushed it out, and then changed it seven times as it was rolling out. It’s really hard to deliver and execute. A lot of banks and financial services companies went into PPP seeing some risks downstream that gave them a little bit of pause at the beginning. And now the forgiveness is a bit ambiguous and we’re trying to make it through working with our clients. 

This month Utah Business partnered with Holland & Hart to host a roundtable event featuring finance industry leaders to discuss fintech innovations, the CARES Act, and our forecast into 2021.

The Congressional Budget Office is forecasting that we will now have a budget deficit of $3.2 trillion for 2020, that’s because of the CARES Act. And the national debt is approaching $27 billion. Is the national debt a problem? Are we recovering enough on our own now or do we need to be taking dramatic action?

Howard Headlee | President | Utah Bankers Association

We want to have the flexibility in moments of crisis to be able to do what we need to do to maintain our economy and our standard of living. And when we run up national debt in times when we’re not at war and we’re not in crisis, we limit our flexibility when we need it to address specific issues.

I don’t want to diminish what’s happening with the debt, I think it’s very scary to be approaching a hundred percent of GDP with our debt. It’s something that we’re going to regret, and it’s something that’s going to be painful to work out of, either through taxation or inflation. 

But I don’t even think they have to appropriate new money. There are billions of dollars in the first CARES Act that have not been spent. If they would just come back and fine-tune and direct the unspent monies into the areas of the economy where it’s needed, we don’t necessarily even need a penny more than what’s already been appropriated. 

Kate Moss | Market Manager | Bank of America

There needs to be a shift in focus. Instead of just infusing the dollars, look at how we need to pivot to get people back to work, look into affordable housing, and re-skilling people who may need to have a different line of work now that is shifting through the pandemic. How do we get those things back in line? We do have a strong economy here in Utah, and we do have a low unemployment rate, so what can we do as business leaders to help get people back to work and keep them as productive members of our economy?

Have the actions that the Fed has taken so far been appropriate and have they done enough? And what do they need to be doing next? 

Ramez Halteh | SVP, Business Banking Utah Sales Leader | KeyBank

In terms of monetary policy, obviously they’re concerned about the long-term implications of extremely low interest rates. And they kind of pulled the playbook that they did, that they rehearsed back in 2008, 2009, and they went in courageously trying to inject liquidity back into the economy.

We talked about the Main Street loan program, this is a Federal Reserve sponsored program. They’ve kind of left it a lot to the bank’s own interpretations. There’s been very little direction. They’ve provided general guidelines on how to approach it. We’ve had 30 years of experience doing SBA loans, and we’ve only really had a couple of months of experience really working with the Main Street loan program. I think I’d like to see a little bit more direction and more assurance from the Fed in terms of how we approach it.

Howard Headlee | President | Utah Bankers Association

The [federal leaders] that we had during this crisis, they’ve been clear-headed and I believe they have remained focused on this pandemic and the economy regardless of the election, and they responded quickly.

The Treasury totally screwed up PPP and the Federal Reserve rescued it. PPP was dead in the water by the way that the treasury priced it, and the Fed rescued the program with their liquidity facility. They have been a steady hand throughout this crisis, and I’m grateful to the leadership of the Fed, that they are where they were when this happened. 

Darryle Rude | Chief Examiner | Utah Department of Financial Institutions

A lot of people ask me whether I thought they did too much propping up some banks. And I said, well, the alternative could have been a big disaster, and we came out of the last crisis pretty well, especially in Utah. I think they’re going to have a bigger role to play going forward as this crisis starts to hit home at the financial institutions. 

This month Utah Business partnered with Holland & Hart to host a roundtable event featuring finance industry leaders to discuss fintech innovations, the CARES Act, and our forecast into 2021.

Everything’s about the economy right now and our economic outlook. So what do you see? What’s your forecast for 2021?

Ramez Halteh | SVP, Business Banking Utah Sales Leader | KeyBank

Right now it’s just a lot of uncertainty. How quickly we come out of this pandemic really determines how quickly we get back on track. It hasn’t impacted all clients equally. Our biggest concern is that should this continue to drag out like this, it’ll have a bigger impact on these companies in the longer term as it will begin to stretch their resources. Right now we’re dealing with it on a week to week, month to month basis in terms of how we’re assessing clients and their abilities to repay us. But I wish I knew. So far, we’re holding up pretty well.

Nate R. Callister | EVP, Head of Utah Commercial Banking | Wells Fargo

Utah will continue to be a heavyweight in the US economy largely due to its fast-growing labor force and its increasing presence in the tech industry. Although customers are hurting in unimaginable ways, those in the finance industry have the opportunity to help them find new ways to move forward, including providing customized, non-traditional financing solutions. We’ve already been working with Utah business owners in this capacity, and it’s an honor to play a small role in helping them push through this challenging time. 

David Stahl | Managing Director & Market Leader | Hillcrest Bank

2021 will be informed by a confluence of things that’ll happen in the fourth quarter of this year. So I do think that you’ve got how well our private companies perform and the impact that that has on the financial services sector and its willingness to continue to extend and lean into new opportunities, I think will influence how well 2021 takes off in January and continues out the balance of the year.

Frank Pignanelli | Executive Director | National Association of Industrial Bankers and the Utah Association of Financial Services

What followed the 1918 pandemic? The roaring 20s. That readjusted the economy, and I think that’s going to happen both locally and nationally. It may take a couple of years nationally, but I’m optimistic about things being readjusted, and I feel very good about that. 

Secondly, historically, industrial banks thrived during the Great Depression. They did very well during the Great Recession. Where there’s going to be a challenge is there is a debate that’s occurring underneath the radar that’s going to explode next year. And that is the national debate on financial services. 

You have a large group of people, academics, and activists that want to shut down innovation, and some of these are being promoted by banks, not financial service companies. They really want to limit the ability of banks to provide services or have partnerships with fintechs. They’re nervous about financial innovation because they view it as being unsafe and insecure. But what the industrial banks and what community banks, the state charter banks have demonstrated, even large national banks, is that you can have innovation be safe and be innovative, but it’s a huge debate that’s going to impact us here in Utah. Are we going to step backward or are we going to step forward?

Lindsay Bicknell is the project coordinator for Utah Business magazine. A native of Cincinnati, Ohio, she graduated from Miami University of Oxford with a degree in communications. She has a background in television, print, and web media, as well as public relations and event planning. As a transplant to Salt Lake City, she can't get enough of the mountains and loves snowboarding.

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