Digital Banking the New Normal Post-Pandemic

 The financial services industry may have reason to be optimistic as it approaches the new year, despite the economic uncertainty created by an evolving COVID-19 pandemic.  

Wells Fargo & Co. Market Executive Jake Ganajian handles middle market banking operations from the San Fernando Valley up to San Luis Obispo County. He said the overall market has several competing factors to it, such as COVID-19 and supply chain issues, but that there is room for confidence in 2022.  

“We’ve certainly seen a lot of business activity across the spectrum of clients that we work with,” Ganajian said. “That’s across sizes (and) across industries as people are well into (business) recovery and thinking through how to even accelerate that as we head into 2022.”  

Businesses are starting to invest and reinvest in their infrastructure, according to Ganajian. The investments range from buying equipment to facilitate more modern office spaces to manufacturers making bigger investments in machinery and production equipment. Most of the equipment finance activity that Ganajian has seen was produced in the fourth quarter of 2021.  

Ganajian said the San Fernando Valley has a lot of characteristics, such as staffing challenges and supply chain woes, that match the broader California economy with respect to the financial services sector.   

“It has caused a lot of our business clients to rethink how their supply chain works and in fact, we’ve seen clients make a move towards diversification,” Ganajian said. “(Of) clients (that) were primarily sourcing products from outside the country, some had chosen to bring at least a portion of their sourcing domestic; others have looked to diversify geographically.”  

Historic inflation rates are also a factor that clients have had to address as they navigate the purchasing of raw materials and their business models. 

Raising prices 

Many of Ganajian’s manufacturing clients are being forced to rethink their pricing strategies due to inflationary pressure on their raw materials. Some clients were proactive with pricing changes in 2021 and many others are thinking about how price increases will be implemented in 2022, according to Ganajian. Such price increases are being considered to offset the cost of materials and staff.  

“It’s really a unique set of circumstances, client by client,” Ganajian said. “But the broad theme of inflationary pressure is definitely being felt across industries and if people aren’t thinking proactively about how they’re going to manage that, it will have an impact on their bottom line.”  

As clients have gotten busier with the recovery, the need for digital banking services has become critical, an option that has become increasingly popular and necessary as the pandemic has evolved. Considering how long the push to digital banking and the pandemic have lasted, banking will very likely not return to what it was prior to 2020.  

“Not only (has digital banking) improved efficiencies, but there’s a lot of cost benefits that clients can look at,” Ganajian said. “In addition, there are security benefits for that. This was a transition that was always going to occur.”   

As digital banking continues to grow, institutions such as Wells Fargo have made investments to ensure their banking platforms are keeping up with the rush. Ganajian said such investments were made pre-pandemic and that currently, Wells Fargo is trying to synchronize its digital solutions with relationship-building efforts to give clients and businesses a complete range of services.  

Ganajian added that his team has not experienced significant shakeups in employment like some other industries have experienced. He said that his team has worked to understand clients’ needs ahead of the curve, which has become necessary due to the unpredictability of the pandemic.