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5 Global Fintech Trends Likely To Stick Around After The Pandemic

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Seven months after the coronavirus pandemic first hit the U.S., even self-proclaimed Luddites have migrated much of their day-to-day life online.

Managers who never planned to run meetings remotely have mastered the art of looking professional from the waist up on Zoom. Tenured college professors have learned how to conduct classes virtually. Busy parents have traded strolling the grocery aisles for scrolling through Amazon Fresh.

This rapid transition to “all online all the time” has had a ripple effect throughout the finance industry. As bank customers seek online interactions that replicate in-branch experiences, institutions are innovating to provide seamless digital services. Contactless payments are seeing all-time high levels of adoption. And even previously tech-shy segments of the population are turning to apps to manage money matters.

Even after life returns to “normal,” it’s likely that some of the behaviors kick-started by the pandemic will persist—including the ways that customers bank, pay bills and conduct transactions. Fintech also provides a variety of tools for addressing broader personal finance issues like paying down debt, saving and budgeting.

Here are five pandemic-sparked fintech trends worth keeping an eye on.

1. Adoption of Fintech Among Older Populations Is Up

Temporary closures or reduced hours of brick-and-mortar bank branches forced some customers to finally download their financial institution’s app. In April, Fidelity National Information Services (FIS) saw a 200% increase in new mobile banking registrations, and mobile banking traffic ballooned 85%.

Among some specific user demographics, adoption of fintech and other digital services has soared. Many older Americans, for example, have reportedly become more comfortable with behaviors like paying bills online over the past six months.

One 2019 study of fintech adoption among low- to moderate-income older adults in the U.S. found that in pre-pandemic times, two thirds of smartphone users over the age of 50 were reluctant to use their devices for financial tasks. Though an official verdict on how these numbers have changed in 2020 is still emerging, anecdotal evidence and a smattering of early studies suggest that Baby Boomers’ mindsets are shifting.

An April 2020 survey by product review site The Senior List found that people over age 60 are using technology more frequently to pay bills online these days—a full 77% of respondents said they’d recently conducted a financial transaction online. Another study by the National Retail Federation reported that nearly half (45%) of Baby Boomers are shopping online more as a result of the pandemic.

2. Consumer Perceptions of Online Banking Are Shifting

It’s not just Boomers who are swiping right on online banking. According to a Boston Consulting Group (BCG) survey conducted in June, a full 44% of 18- to 34-year-olds enrolled in online or mobile banking for the first time during the Covid-19 crisis. Another study found an overwhelming number of people—69%—said fintech was a “financial lifeline” during the pandemic.

In fact, fintech, in general, is seeing an explosion of active users. In a survey of 3,000 U.S. adults, IT consulting firm SYKES found double-digit increases in new users for personal finance, budget, investment-tracking and stock-trading apps since the start of the pandemic.

This uptick in consumer interest in fintech is likely due to several factors. For one, many people are experiencing considerable financial upheaval right now. Turning to budgeting apps, for instance, may be a way to reestablish control and keep a hawk eye on precarious bank account balances. Secondly, a few notable fintechs have stepped up to the plate to offer aid or relief programs. Some are even slashing fees to serve a larger audience.

Lastly, there’s the safety element—even with many bank branches and retail stores reopening nationwide, some customers remain uncomfortable venturing through their doors. And once customers experience the convenience of mobile, they very well may never go back to traditional banking: The BCG survey found that nearly a quarter of respondents plan to use bank branches less or stop visiting them completely moving forward.

Overall, customers seem pleased with how their banks are responding to the pandemic. The BCG survey found that respondents had a generally positive outlook on their bank’s response efforts, with just 5% reporting criticism of their institution’s handling of the crisis.

3. Low-Cost Remittance Platforms Are Gaining Traction

Many fintechs position themselves as more accessible alternatives to legacy institutions. Now, companies promising affordable services and a “customer first” ethos must prove their mission statements are more than well-written marketing.

One arena in which this is particularly evident—and an area that may change forever as a result of Covid-19—is remittances. In this sphere, fintechs like TransferWise offer significantly lower remittance costs than traditional providers. In the Covid-19 era, these savings are particularly critical for financially stressed consumers, including migrant workers sending money to relatives overseas.

The remittance space hasn’t been as quick to adapt to the digital era as some areas of the finance industry. But Covid-19 and its economic pressures may pave a clearer path forward for low-fee remittance and payment transfer services that are transparent, fair and use reliable exchange rates. TransferWise, for one, reportedly saw a 17.5% increase in new users in March.

4. Banks and Credit Unions Are Learning New Tricks

To compete with digital-first players, traditional banks and credit unions are mobilizing to improve the customer experience online. Digital transformation, however, has historically had a bit of a David vs. Goliath problem: A J.D. Power survey conducted earlier in 2020 found that six major banks started the year with significantly higher levels of digital engagement, compared to regional and midsize banks.

Smaller players are now racing to get on board. Unsurprisingly, companies that already had an established mobile or online presence before the pandemic are outperforming those who have had to create such services from scratch. But some smaller organizations already set up to operate online are seeing wins as well. With many businesses applying for Paycheck Protection Program (PPP) loans, some credit unions offering small business services saw significant upticks in membership earlier this year.

However, if banking will be mostly online in the future, there’s still plenty of room for improvement.

Despite widespread digital transformation within the finance industry, customer satisfaction rates of banks that operate exclusively online remain comparatively low. The J.D. Power survey noted that, in pre-pandemic times, customers were generally less happy with digital-only services than they were with in-branch or a mix of in-person and online interactions.

5. The Next Evolution of Payments Is Here

Online retail spending is up in a big way. Interest in and reliance upon ecommerce has skyrocketed. According to IBM, the pandemic accelerated the shift from shopping in physical stores to online by about five years. This has changed how people pay for things both online and in stores.

Customers shopping online are increasingly appreciative of seamless transactions via digital payments platforms like PayPal. In a tangentially related finding, the J.D. Power survey found that customer satisfaction with their bank rose significantly with integration of peer-to-peer (P2P) platforms like Zelle, Apple Pay and Venmo.

For customers shopping in stores, cashless and contactless payments are likely here to stay. The big banks and larger credit unions are on top of the trend. At the onset of the pandemic, some banks preemptively upgraded customers’ physical debit and credit cards to include “tap to pay” technology. Consumer usage of platforms like Apple Pay and retailer deployment of embedded contactless payment terminals like Square has also reached unprecedented levels.

As with any technology sector, fintech is an ever-evolving landscape—and it’s one that the pandemic has sent shock waves rippling throughout. But thanks to fundamental shifts in the way consumers perceive and depend upon digital finance tools today, these fintech trends just may stick around long after people have holstered their hand sanitizer.

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