How have you found lockdown, both personally, and as a leader of a large customer-facing team within NatWest?
I have found lockdown challenging in both respects. From a personal perspective, there has certainly been benefits in terms of not commuting and as a father of three children all at home through this period of time. There are certainly ups and downs that we have all been through as we have learned to work at home. I am very conscious that is an experience that my colleagues across the business have shared, and one that our customers are also wrestling with.
Our thinking is very much about how we support our customers as they deal with these new pressures. In terms of supporting colleagues, we have had a real focus on mental health and wellbeing, helping our people navigate through a very different operating and working environment. You are really conscious that some people do feel quite isolated through this, your mental health, being under strain, and so I have been really focused on supporting our people through this period.
What were the biggest challenges that your customers faced and what measures were you able to introduce to support them?
I think the immediate pressures that our customers have faced were very much around dealing with the immediacy of lockdown. Through that period from March to June, over 70 per cent of small business customers really stopped trading. So our focus was giving them help and support practically moving their businesses, either from work locations to home or potentially moving from physical sales to digital sales.
We provided access to HR advice through Mentor Live, which is a digital support package that we’ve got and help for those customers who continued to trade and who moved from cash to card transactions. We did this through our business Tyl by NatWest which is a card acquiring product that allows customers to take Card Payments rather than cash. That is real practical help and support. We also recognised the impact of lockdown on cash flow.
So, over the period up to the end of June over a quarter of a million of our customers have accessed some sort of support from the bank, be that capital repayment holidays, overdraft facilities or indeed accessing the government loan schemes. And we have provided over £12bn worth of support to customers through Coronavirus Business Interruption Loans, and Bounce Back Loans. We are providing a significant proportion of the funding and that has gone into supporting small small businesses in the UK. Where we are now is really helping our customers get back to trading and getting back to health. So, we’re providing online support through Business Builder, which provides online tutorials around how to get business back up and running.
We are also interested in piloting mentoring support where we open up to our customers the ability to work with a bank mentor, who will help them with their business planning and some real practical steps about how to get back to health.
Presumably, some sectors and some businesses have found this harder than others?
When we look across our customer base, it is quite clear to see that, for instance, that the retail sector, the leisure sector, were hit very, very quickly by lockdown. They just fundamentally weren’t able to run their businesses during that time. We have been really focused on how we help customers in those sectors. It is quite interesting that the support we provided very quickly through capital repayment holidays, and then through the government loan schemes, has really flown to customers in those sectors, leisure and retail.
We feel pretty confident now that businesses are coming back to health and taking a lot of confidence from the NatWest small business PMI survey. The month of August showed the fastest growth for small businesses for the last two years. Construction seems to be out of lock down more quickly, with the services sector showing slower recovery. But again, I think we feel confident that the trading environment is improving for our customers.
Where do you think the biggest challenges are for businesses over the next three to six months?
Firstly, it is the practical considerations of taking businesses that may have been stopped for the last two to three months and getting them back into trading. Speaking to customers in, for instance, the restaurant trade, they tell us about the practical changes they’re having to make in terms of how they operate. They need to bring in social distancing, so that they can actually operate safely and serve their customers safely.
That real practical, getting back to health and adapting businesses to be able to trade successfully, is a challenge. Secondly, as we look into 2021, the customers who have borrowed and used the government’s loan schemes will start to repay that. So, we are working with our customers to help them prepare to make the repayments on those government loans.
We are offering some practical advice and support through tools, such as cash flow forecasting, so customers can go online, access these tools, and start to plan. You want to help them understand what their repayments will be, and to plan what their cash flow forecast would look like through that period of time.
Then our relationship managers are working with customers, to help them look at how they can make changes to their businesses to be more efficient and operate more effectively, so that they have got more cash in it to be able to be able to repay those loans as they started to fall due.
What do you think the big challenges for NatWest will be as we come out of the crisis?
I think the real challenge for NatWest as we come out the crisis is very similar to our customers. We have moved tens of thousands of our people from working in offices into home working. We are now looking forward as we move into 2021, as to how we move people back from home working back into offices, and do that in a safe way. There are some real practical considerations that we’re planning for in terms of how we run our properties, which are very similar to the issues that our customers are also facing.
More broadly, the challenge, but also the opportunity, is to be really relevant for our small business customers and SME customers going forward. Many of them have adapted their business, they’ve moved from cash to digital payments, they may have moved from shops to online and the needs that they have are probably very different to what they had pre-Covid and we need to remain really relevant to those customers, understand how their needs have changed and make sure that they are able to offer access really great products and services from the bank that will help them run their businesses into the future. And I think that is really about helping businesses bank more digitally and being able to do more of their banking digitally, rather than face to face.
We very much recognise, the important role that we have got to play in terms of providing funding to businesses, as they come out of lockdown come out into recovery, and indeed, hopefully start to rethink about investment. As businesses start to grow, they will need access to working capital support. They will need access to financing to be able to invest in their businesses, to help them become even more productive and also to adapt to a new environment in that new post-Covid era.
Andrew Harrison is head of business banking at NatWest