Brendan Coughlin, Citizens Head of Consumer Banking, joined Yahoo Finance Live to discuss the rise of digital banking and how COVID-19 has impact the banking industry.

Video Transcript

- Brendan Coughlin is the head of consumer banking at Citizens. And we're inviting him into the stream because a lot of us want to know, what is the status of consumers right now? We keep hearing about great savings rates and people paying down debt. But somebody like Brendan can tell us in real world experience what's happening out there. So what are you seeing?

BRENDAN COUGHLIN: Yeah, well, thanks for having me. The consumer has actually been surprisingly very resilient so far through the pandemic. While there are certainly some pockets of stress out there without question, we're seeing a lot of underlying metrics that would suggest the majority of the US has landed on their feet or is still on their feet. So a few examples of that-- debit card spending measured by dollars is actually up 12% to 15% year on year, and transaction purchases are up 2% to 3%.

So at the trough in April and May, we saw that down almost 35%. So there's been a massive rebound from May all the way through today. And it's really been holding in quite well. So we're pretty confident of where the consumer sits today. When you look at some credit metrics in the bank, we had about 8% of our consumers that went into what's called forbearance, which means you're going to skip a payment or two for a period of time. That has now migrated down from 8% to about 1.5% over the course of the last 90 days.

At the same time, our delinquency rates, which means you haven't been able to make your obligation of payment, has been actually down. So it's sort of counterintuitive that these customers raise their hands saying they might have stress, as they've come back in to make payments, the vast, vast majority of them have landed on their feet. And so we're quite confident in the state of the consumer's health right now.

- Brendan, speaking of just the consumers in some of these trends that we've seen accelerate because of the pandemic, how has it changed the way that customers really just interact with their banks on a day to day basis? We know more and more banks have been investing in technology, kind of migrating towards that. But to what extent has the pandemic accelerated that?

BRENDAN COUGHLIN: Yeah, it's accelerated a dramatic amount. And we have a pretty much of a seminal moment here in the banking industry. These trends have been around for a bunch of years, where consumers have been engaging more and more digitally for quite some time. Branch transaction has been coming down at about a clip of 7% a year.

And we see this as a major step change acceleration of these trends. So our digital metrics have been up 25% to 30% year over year. Our branch transactions at one point were down 50% year over the year. Those have rebounded, now down about 25% year over year. But we think that's going to stick for a period of time.

So you're seeing a massive transition to digital banking where transactional banking is now happening on your phone. And you're really going into brick and mortar for advisory-based conversations on those big life moments that matter for you. So it's really changing the way banks think about their distribution around their people, around their capabilities. And we've got a very significant investment plan to really reposition the bank for a tech-forward organization.

- Very quickly, Brendan, I'm curious, because a lot of us use digital banking, but the mega banks, the large banks seem to be favored by the regulators. Are the smaller banks putting up a good fight to maybe change some of that?

BRENDAN COUGHLIN: Yeah, look, I'm not sure I would necessarily agree that the regulators have the large banks in favor. Many of the regulators were, through the financial crisis, really rooting for the small guys, the really micro small guys. But I think the supraregional banks, like Citizens, are in a really unique position where we're big enough to matter, we've got the scale to build these great technical capabilities and these great digital capabilities, but we're local enough that we really care about our customers and we can really provide that unique advice where we really get to know them, that the customers aren't just a number.

So we feel really, really good about how we're positioned. We're more agile, we're more nimble, we can make decisions faster. We're moving very, very fast. We don't have a big, huge bureaucratic organization to get on board when we want to make a big investment in technology. And so we feel quite, quite confident about our position at the moment.

- And a lot of people seem to be more comfortable with those supraregional banks in some cases. We appreciate your being here and want to let everybody know that Brendan Couhglin is the head of consumer banking at Citizens. Look forward to your next visit with us.