Christopher Stevens is the Rhode Island executive director of commercial banking for JPMorgan Chase & Co. He spoke with Providence Business News about the results of JPMorgan’s recently published Business Leaders Outlook Pulse Survey, which interviewed executives from 520 U.S. middle-market companies about their business outlook for the next year.
PBN: What are your major takeaways from JPMorgan Chase’s Business Leaders Outlook Survey?
STEVENS: Nationwide, 1 in 2 business leaders expect their companies to return to normal in the next 12 months, but 70% of companies surveyed cited economic uncertainty – both domestically and globally – as the leading challenge facing their business operations. Similarly, economic uncertainty is one of the top concerns business leaders are sharing with us here in Rhode Island.
Since the outbreak of COVID-19, businesses have been faced with unprecedented demand, destruction and squeeze on liquidity. Now, local businesses are focused on how to protect the financial core of their business to weather this period and prepare for what a “post-COVID” world may look like.
PBN: How, if at all, might the experience of business leaders in Rhode Island/New England differ from what the survey indicates on a national level?
STEVENS: In Rhode Island, we’re hearing the same business concerns that other markets are facing. It doesn’t matter what industry you’re in, all businesses are closely watching COVID-19 to see how it will affect the state of the economy, and their revenue potential.
According to the survey, 83% of companies are running at a reduced capacity and 59% of business leaders are concerned about growing sales. However, the top line is not the only thing keeping business leaders up at night. This virus brought to the forefront an operational challenge for many. A majority of my clients and prospects adopted some form of a digital operation model, from implementing a remote work environment to managing finances digitally.
PBN: What are the major factors or variables that will determine how long and how severe this economic recession lasts?
STEVENS: I believe the largest variable at this moment is the timeline to a vaccine. The market hates uncertainty. Positive results from drugs in development and a defined timeline would go a long way in shortening this recession. Unfortunately, no one knows what the future will hold, but as a firm, we’re focused on supporting our employees, customers, clients and communities. As we continue to navigate this challenging and uncertain environment, we will do everything we can to support Rhode Island companies.
I think what this pandemic has showed us, is the importance of adapting to change. More than half (56%) of business leaders have already made permanent changes to their operating models or plan to do so in the next three months, and 54% of business leaders have, or plan to shift, their operating models to be more online as a result of pandemic-related closures and changing consumer habits.
PBN: The survey indicates more business owners are using digital banking and treasury tools. What long-term impact will this have on the banking industry?
STEVENS: COVID-19 has accelerated the consumer behavior from offline to online, a growing trend that predates the current crisis.
This digital transformation is happening in the corporate and treasury agenda as well. According to our 2020 survey, 59% of business leaders have increased, or plan to increase, their use of digital banking and treasury tools to manage cash flow, send and receive payments, and streamline operations.
We’re working with local companies to activate e-signature capabilities, implement digital platforms for check printing and deposits to rapidly replace disrupted physical processes and sustain operational continuity, and more. Treasurers have doubled down their priority on enhancing cash visibility and access, real time where possible. Many companies are already managing finances digitally. Those that aren’t realize they will have to implement new forms of technology to remain competitive.
It is clear these structural trends are here to stay and as a result, we’ve increased our training resources to better educate local individuals on how to effectively digitize their payments and processes.
PBN: How can business owners best prepare and protect their companies amid this tumultuous economic climate?
STEVENS: One of the most critical areas we are focused on with clients is cybersecurity and the increase in business email compromise. With the onset of COVID-19, companies rapidly transitioned their operations and staff into a remote and virtual-first terrain. Fraud continues to proliferate and BEC is among the most serious threats that businesses face – particularly in times of crisis. We’ve seen several local companies targeted by cyber scams. Therefore, it’s important to have the proper tools and procedures in place.
To help educate business leaders on how to prevent BEC and other types of fraud, we created a microsite with helpful tips and resources. We also recently introduced a Resiliency Diagnostic Tool, which makes it easy for businesses to evaluate themselves across seven key areas – liquidity management, cash positioning/forecasting, fraud, access, technology, business continuity plan development and communication.
Nancy Lavin is a staff writer for PBN. Contact her at Lavin@PBN.com.
