4 ways coaching can support in the BANI world during a financial crisis

Banking is the backbone of any economy and any turbulence here affects millions of people.

The current financial crisis in the US banking system is the latest sign of a BANI (brittle, anxious, non-linear, incomprehensible) world.

How can we deal with the anxiety when fundamentals of our existence are shaken? One way is via coaching.

Coaching for financial literacy

Coaching can be a powerful tool for individuals and businesses to develop financial literacy, establish healthy financial habits, and make informed decisions about their finances.

While trying to map the reasons of the banking collapse in the US with some banks like Silicon Valley Bank amongst others shutting down operations, I evaluate 4 ways how having a coach can address the impact of such hardships on people’s lives.

Brittle – Though the system looks to work well on the surface but it was already showing signs of collapse. Large banks have a more diversified customer base with withdrawing spread over larger period than smaller banks (read the ones which collapsed). The smaller banks are therefore under pressure of not losing out and tend to take riskier decisions.

Solution: A coach armed with the agenda of financial prudence from the bank management would ask questions to develop a risk management framework suitable to the smaller banks and mitigate the risk tradeoffs from an investor vs. regulator point of view.

Anxious – The lack of confidence by the \many depositors, who started withdrawing their deposits prematurely, raised further pressure on the banks. The result was a domino effect on other banks reeling under pressure of the already high interest rates.

Solution: A coach hired by such depositors will help them to work with their anxieties and not take decisions in a state of panic. Addressing the feelings and fears of how bad can this crisis get or whether it will be contained, are ways to ensure rational decision making by people.

One of the key benefits of coaching during a financial crisis is that it can provide individuals with a sense of empowerment and control to make informed decisions about their spending and investments, and avoid overspending or taking on excessive debt.

Nonlinear – Questions have been raised at the competency of the regulator, especially in a developed market like the US. Accusations made are oversight, lack of regulations for different sectors, inability to control the impact of rising interest rates, to name a few.

Solution: A coach on the regulator’s team would help keep the focus on its purpose and core objective across different business cycles; especially during transitions and other one off factors help the management find solutions to formulate new policies or norms on deposits and lending to ensure minimal affect on the banking eco system.

Incomprehensible – Even with the abundance of data, information and analysis available in today’s time, the regulatory framework of a developed economy like US was not able to gauge the collapse. With more information, the noise increases and it is difficult to find the real truth.

Solution: A coach working with the regulator would help the team identify the need and purpose of collecting such data and then align to the overall objective. Through stress testing the processes or gauging the existing stress felt by a team member, a coach could have helped the team to take early action and create healthy boundaries and make necessary provisions based on market trends.

Coaching can help mitigate the impact of financial crises by promoting a proactive approach to financial planning. Further a coach can help clients develop a long-term financial plan that takes into account their goals, values, and priorities.