Ever since the late 2000s, the word “recession” has become one of the most frightening words to hear for homeowners, corporations and employees nationwide. The word brings back memories of a time where the national unemployment rate hit numbers over 10%, where the GDP declined by over 4%, millions of houses were foreclosed on, and the DOW Jones dipped to historically low numbers.

We still feel the impacts of the last recession in certain sectors and some analysts predict another economic downturn is on the horizon. That is why it is crucial for corporations, and in this case, financial institutions, to consider what exactly changes during a recession. Proactive measures can be taken to limit and even buffer its effects on your organization.

When a time of economic hardship hits, both consumers and businesses alike change certain behaviors in order to adapt. For example, during the last recession consumers decided to go out to dinner far less and at cheaper establishments to save money. In the same way, consumers let go of their previously favored brands and chose less expensive, non-established brands when it came to food, clothing and other essential needs.

Consumers also shifted their spending to purchase used cars instead of new. Home improvement projects screeched to a halt, and renting an apartment became preferred over owning a home. There was also an increased focus on saving money, with the number of households with an IRA and 401k both growing.

Financial institutions had very similar changes in behavior when compared to the average consumer. Investing and spending decreased in the last recession, and greater focus was put on finding ways to free up capital and save money. This came in the form of closing branches, laying off workers and using more caution regarding who could receive loans.

The financial industry is hit extremely hard in times of recession, yet certain measures can be taken to come out as a winner.

Invest in the right technologies

For companies anticipating the next recession, digital technologies will provide new ways to move faster and simplify their businesses with both step-change and continuous improvements. However, investing for the sake of investing can prove detrimental for a company. That is why leaders must take a wide look at their company and pinpoint exact areas where technology can help their business grow. Whether it comes in the form of dollars saved or hours saved, investing in the right technology should be an essential part of a company’s strategic plan.

Be on the offensive

It may seem strange to hear the words “be aggressive” and “recession” in the same sentence, but Bain & Company’s research of 3,900 companies worldwide shows that “winners” were typically aggressive and had a plan to prepare for the last recession. The winners excelled in four distinct areas: early cost restructuring, financial discipline, aggressive commercial plays, and proactive mergers and acquisitions. Instead of focusing on survival and playing the waiting game for the recession to pass, the winners were the aggressors. Since the last recession, they have seen an average growth of 14% in nominal EBIT. The organizations that struggled each tended to follow a few recession dead-ends. Many followed the misconception that extreme cost-cutting would be enough to survive the storm. They cut R&D across the board, halted sales and marketing activities, laid off valuable talent and ruled out acquisitions.

Another economic downturn may be on the horizon, however, if financial institutions can focus on investing in the right technology and on being the aggressor. This could mean the difference between winning and losing.