Digital banking essentials revealed by virus
The coronavirus pandemic is showing what really matters when it comes to digital banking tools.
Financial institutions are always quick to tout the latest addition to their suite of digital offerings. You can now buy shares of cryptocurrencies, a train ticket, and have a digital concierge at your service. While these bells and whistles are fun to promote and discuss, the COVID-19 outbreak has revealed what is most important when it comes to digital banking.
Our current reality, with so many people confined to their homes, cash-strapped, and not engaging in any leisurely activities, has pushed those accessories to the background. Now, the focus is squarely on the reliability of financial institutions and their digital offerings. Customers need simple-to-use, intuitive apps that work every time they access it. This seems, and is, obvious. However, the quality of banking applications on both phones and computers varies widely. I can personally attest to this fact, having lived in three different countries in the past two years. Having opened, maintained, and closed no fewer than five bank accounts across the United States, France, and Denmark, simplicity and quality of banking interfaces should not be taken for granted.
Simplicity of use is especially important, given the disproportionate manner in which this virus affects elderly people. The virus is significantly more lethal for older people and has rightfully prompted them to be more cautious in their movements, so as to minimize their risk. This segment of the population, regardless of country, has always relied more heavily on in-person banking. Now, the elderly are faced with the challenge of managing many aspects of their daily lives – shopping for groceries, finances, seeing family – using new, and often foreign, digital tools. Banks that can deliver easy-to-use tools, regardless of their customer’s age, will provide an essential service and differentiate themselves from their competitors.
Given the financial stress so many people are currently experiencing, everyone needs to be able to check their accounts and get quick, understandable snapshots of their financial situation. With financial literacy varying widely among people, banks can be important guides in helping their customers. That’s why smart budgeting can be an essential tool. It allows people to plan ahead with a better sense of clarity during a period of considerable financial disruption. Many banks have incorporated some type of budgeting tools into their apps but it is certainly not the industry standard yet. We can expect this to change as a result of this crisis.
On top of the forced changes to the way people manage their finances, there is a notable acceleration in the contactless payments space. People are increasingly wary of handling dirty bank notes and merchants are shifting rapidly to only accepting contactless payments. Most major banks and neobanks have already incorporated ApplePay and GooglePay functionality into their offerings, but the current situation will force laggards to speed up their adoption of this new trend. While some countries, notably in Scandinavia, have widespread adoption of contactless payments, many others are still heavily reliant on cash. This virus, and the nature of its spread through droplets on surfaces, will force countries to reduce their reliance on cash. Financial institutions must follow suit with reliable payments services.
There is a coming wave of new digital banking adoption on the horizon. The future of branches is a question that Efma has examined in previous articles and reports. Now, the question will be even more pressing, as people will seek ways to minimize their exposure and contact to other people and possible vectors of virus spread. People will rely on digital banking to handle their financial matters remotely, only visiting bank branches out of absolute necessity.
With the expected influx of new digital banking customers, banks must prioritize the essentials. While now is certainly a time to be accelerating digital operations and offerings, the time for nice-to-have’s is later. People already have enough issues on their mind during a global pandemic, they don’t need to add financial services issues to the list. What people need right now, as has always been the case, are digital banking tools that are reliable, intuitive, and ease the burden of managing one’s finances.