The COVID Diaries: nonbank financial-institution borrower 2

The following interview is with an Australian-based funding executive at a nonbank financial institution. It was conducted on 3 April 2020.

We are now into the second month of home working. Is cabin fever starting to set in? Do you think we can continue doing business in this fashion for three to six months?

What is noticeable for me, and I imagine it is similar at other nonbanks, is that the workload has increased significantly. I am working much longer hours than before the crisis. This is to be proactive and monitor variables, such as volume of receivables. All the variables we would typically monitor weekly or monthly, we are now monitoring daily.

It is fair to say, though, that there is nothing to take action on right now. We will see the impact in time if people are being stood down and are unable to make loan repayments. It has not flowed through the book yet but we need to be prepared for when it does.

The challenge is staying connected to the broader team while we are all working remotely. This is where we may start to see the weakness of working from home for an extended period. You can’t get up from your desk and just have a quick chat with someone, it needs to be a phone call – which takes longer.

While there are benefits to working remotely, such as saving on commute times, there are a lot of disadvantages, such as missing the team connection and not being able to have real-time check-ins with a broader group of people. My focus at the moment has been mostly on my team but when you are in the office, you have the ability to check in with teams across the organisation, such as risk, product and marketing.

I am also interacting more with senior management. The added workload makes it much more challenging. It has been only a short while so how this evolves if it lasts 3-6 months will be interesting.

Once we get over this initial phase and establish a new norm, I think the workload will revert to more manageable levels. Then we will really need to make the effort to connect remotely.

How close do you think the market can get to business as usual in this environment?

Mechanically, the market should work just fine. When the market is functioning, everything is done by phone anyway – so that is not the issue. The issue is the fact that the market is dislocated.

The uncertainty around how long this lasts and how far-reaching the impact becomes is creating unease and makes investors unwilling to participate. This is the bigger issue.

If we start to see stabilisation in the infection rate and some easing in movement restrictions, I think some confidence will come back to the market. The process side of a deal should work just fine, it is more the sentiment that is the barrier.

“The health element is vitally important but there is the question of whether it could be better managed. It feels like we are not just stalling the economy but throwing it off a cliff.”

Has your view of the crisis and the nature of the challenges it presents changed? It seems Australia has prioritised public health over the economy, at least in the medium term. How are you thinking about that trade-off?

The health element is vitally important but there is the question of whether it could be better managed. It feels like we are not just stalling the economy but throwing it off a cliff. If the economy cannot come back, there will be wide-reaching implications.

Central banks and governments are aware of this and they are throwing everything they can at the problem. If it is not enough and the economy goes into a depression, I think people will begin to question whether this has been handled in the best way.

Are you more or less optimistic about the crisis than you were during the period of moving to home working and adding social distancing measures?

I started off being optimistic. Seeing the Stage 3 shutdown, all the measures being put in place, and businesses everywhere closing, is making me less optimistic. When I look around and see that nothing is open, it is hard to be optimistic.

I think maybe the economy can withstand this for a month, but I do not think it can withstand it for six months. This worries me. If the shutdown lasts that long, it is hard to see how the economy bounces back, because businesses will be at a point where they cannot return.

How do you think things will be different when we get back to normal? What changes can you see to work practices, social changes and the economy?

It is a good question. Do we just bounce back, learn nothing and pretend it never happened? Once people can go out in public, will they go straight back to bars, restaurants and cafes and just forget the isolation that was in place?

I expect some changes in our approach to risk and the way we work. At a minimum, a pandemic will now be a part of any business-continuity plan.

There will be more acceptance of people working from home. Some organisations had already embraced this, but many had not. We are now proving that a whole workforce can work from home for a prolonged period. It is hard to argue that it does not work.

Equally, for all the reasons I mentioned before, you can’t have everyone working from home all the time because you do miss a lot.

What is the latest article you have read on COVID-19 and what did you like about it? Can you provide a link?

I googled what the virus actually does to the body, particularly whether there is permanent damage if you get it. I liked this article, which is fairly easy to read, though it also highlights how little we do know about the virus.

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