The seismic economic repercussions of the COVID-19 pandemic will have continuing and serious effects globally for many years to come. It has shaken traditional business methods and processes to their core.
The enduring effects of this Coronavirus crisis have also accelerated demand for technology that can digitalise, connect and automate business infrastructure, especially financial systems and controls.
One of the most basic and significant of these post-pandemic trends will undoubtedly be the altered expectations and preferences of consumers. They will be reluctant to return to high streets and will rely even more on digital payment for goods and services. The fact that working from home has seen a massive upsurge will further increase this reliance on transactions based on mobile technology.
When consumers do need to make financial transactions outside their home, they will certainly be even more reliant on contactless payment systems post-pandemic.
This is partly as retailers and the governments have encouraged this transactional method as part of infection control measures. Swiping a card or mobile phone to make digital payments is habit-forming, and new ‘converts’ will be impressed with the speed and convenience, as well as reassured by the security of mobile financial solutions.
It goes beyond that though and links to the ‘fear factor’ set to linger after the COVID-19 ‘natural disaster’ dissipates.
People are more afraid of cash and coins. There is enough evidence to suggest these fears are grounded in scientific evidence, and that both can carry harmful pathogens – see our blog on the topic of how clean cash is.
The statistics speak for themselves.
A year ago, 30% of consumers believed that making contactless payments is a normal and natural method. Now, that figure is 38% (and rising) as consumers increasingly see digital wallets and contactless payments as the way forward.
In Germany, the statistics are 35% pre-pandemic, and over 50% of consumers now preferring to go contactless. New research suggests that even the traditionally distrustful U.S. consumers are feeling more assured in making contactless payments.
Being able to make transactions from a distance, in a secure and controlled way, is highly likely to be part of the ‘new normal’ when retailing recovers from COVID-19 shutdowns.
So, how are the movers and shakers in the sector responding to the ‘earthquake’ effect of the Coronavirus crisis, in order to produce groundbreaking solutions?
Many financial organisations have reviewed and repositioned terms & conditions and some of their central revenue collection systems, to accommodate the new landscape. This pivots not just on how consumers want to pay, but also their ability to meet existing obligations due to the financial hardships and changes to income patterns they are experiencing.
Other financial organisations are focusing on the way they process customer interactions, to create speedier and more secure systems, without compromising due diligence checks on lending for example.
Accelerating the development and adoption of transformational technology is also a common reaction to the challenges COVID-19 brought in its wake.
To illustrate the above, here are just a few examples of recent FinTech news and other Coronavirus response measures.
These exciting developments, joint projects and tech solutions are highly likely to be the tip of a very big iceberg.
There is a push from global companies to find more advanced, agile and scalable on and offline financial solutions. This dovetails with both consumer desire and government guidelines, pulling physical cash out of the equation.
Contactless payments based on mobile financial services are covering the cracks created by the COVID-19 pandemic, and building a more solid, secure platform for companies to use for business growth.
In effect, the fall-out from COVID-19 is as much about gain, as it is about pain.
Some of the FinTech response is based on surviving the resulting backlash and meeting the changes in consumer needs and preferences. However, it is also about seeking sustainable solutions that enable them to engage with customers in a more secure, assured and streamlined manner.
The track record that digitalised systems have for achieving these goals requires little introduction. As soon as you switch to digital processing, you unlock the powers of automation for example, as well as end-to-end connectivity and transparency.
What would the effect be, if you clung on to an existing business model after the COVID-19 earthquake and aftershocks subside?
Resisting transformation to digital payment systems and innovative technology in this sector could bring your long-term survival into question. Even if a lack of investment balances your books in the short term.
Little or no action creates the risk of being left behind by your competitors, and failing to keep pace with consumer demand for quicker, safer and ‘cleaner’ payment solutions.
The shakeup from the Coronavirus crisis has made it clearer than ever, that digital financial systems are the way forward and there is no going back!