Coronavirus-led lockdowns and social-distancing orders have made people change the way they bank, pay and shop. The pandemic-focused government measures are boosting the digital banking space by reshaping consumer banking and payments at a rapid speed.
Experts believe that once consumers find these digital services convenient, it will be tough for them to go back to the old banking ways. Thanks to technological advancements, cashless transactions have made remarkable progress. Now, with COVID-19 boosting digitization, the end of paper check may be near.
Factors Driving Demand
Since the coronavirus outbreak, major cities have been under lockdowns and several brick and mortar banks have been closed to slow down the spread of the virus. Several banks have modified or curtailed in-person branch services to abide by social-distancing norms and avoid rush and keep employees safe.
Some banks have requested customers to make an appointment with the branch and many have limited customers' access to only drive-through facilities. At the beginning of March, JPMorgan Chase & Co. JPM announced the closure of 20% of its branches across the United States and scaled back weekday hours at the rest of the branches.
This in turn has led consumers to rapidly adapt to mobile wallets and contactless payment methods to avoid the exchange of currency or checks, which may spread infection. And not only for shopping, people are now avoiding visiting ATMs and are instead learning to deposit and transact money online through their mobile applications.
Bankers have reported significant growth in digital banking, especially as stimulus checks have started rolling out. Several new accounts were opened online during the crisis to just receive stimulus checks and are expected to remain active even after the pandemic is over. In fact, many Americans who earlier used to check their balance once in a week now check their accounts online through applications or the website several times a day.
Head of digital banking at Key Bank, Jamie Warder, reported that the bank has seen double-digit month-over-month growth in online usage since the coronavirus pandemic hit.
Digital Banking: The ‘New Normal’
Digital banking may not be a new jargon for the world but the trend is surely picking up fast. Many experts in the field believe that digital banking is here to stay even after the coronavirus pandemic is over. A recent survey by Novantas supports the statement as only 40% of respondents said they expect to return to branches post the pandemic.
In fact, according to Fidelity National Information Services, Inc. FIS, there was a 200% jump in new mobile banking registrations in early April, while mobile banking traffic rose 85% in the same period. On May 13, Fidelity National Information Services released a survey report on more than 1,000 American consumers, focusing on the ways American are paying and banking while abiding by the social-distancing normal.
More than 45% of the respondents have changed the way they interact with their banks since the outbreak. Asking about their plans for future usage, 31% of respondents stated they would continue to use more online and mobile banking even after the pandemic is over.
These surveys and reports show rising demand for digital banking and is a wake-up call for bankers to reassess their operating ways. In fact, several banks have been investing more in technology to keep up with demand. Investment in financial and banking technology will lead to further automation and may transform back-office jobs like new loan, overdraft handling or customer service.
Bank of America Corporation BAC recently reported that it is simplifying its loan payments process, upgrading it to a two-click process for better customer service. Another giant in the banking industry, Diebold Nixdorf, Incorporated DBD is making incremental shifts to combine digital activity with brick-and-mortar visits in order to reduce the number of customers at the branches.
Bank of America carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Private bankers like Live Oak Bank are collaborating with Plaid, a technology platform to serve small businesses and personal customers with security and speed. These customers can use the online banking platform to avail services within hours after following all legal processes.
What’s more? The ResearchAndMarkets.com’s “Digital Banking - Thematic Research" report states that customers now demand better, faster and cheaper services. And in the efforts to make digital transformation, banks should focus more on putting the customer at the heart of digital strategy and deliver human-like help and support with safe and secure data sharing.
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