It is no surprise that the Covid-19 pandemic has made significant changes to our lives. There’s a limited chance that life will return to how it was when there have been more than 280,000 deaths, industries brought to a standstill and entire economies are shrinking.

This has caused significant changes to the way financial services are going to be delivered in the future. This is partly because there’s going to be a high demand for digital payments and mobile financial solutions.

Digital Services Seeing a Boom During

Digital services are seeing a significant boom during the pandemic. Zoom, for instance, saw revenues surge by 78% and its stock valuation increase by 100%. Other companies like Netflix, Roku, etc. have also seen a significant boom and it is no surprise that Disney+, the new streaming service from the entertainment giant, has benefited significantly from people across the world being under lockdown.

In Sub-Saharan Africa, the technology sector keeps the economy active. There has been a significant increase in the use of mobile money and digital financial services in this region. Even before the pandemic, this area of growth in the sector was projected to be significantly large according to the 2019 report of GSMA.

The UK also has one of the highest usages of digital payments. In 2019, the value of digital payments was US$176,077 million, making it the third-largest in the world behind China and the United States.

As the world gets used to social distancing, the need for digital financial services are going to continue to rise and this is where businesses need to be prepared.

There are three mobile financial services which are going to need serious investment for the financial sector to be prepared for the evolution within society.

1. Digital Payments

The first element is going to be digital payments. Across Europe, there has been a significant increase in the demand for Fintech services because consumers are looking to abandon cash due to the potential of it being a medium for spreading Covid-19. According to research, the demand for digital payments has increased by 20% while the average transaction value is more than 50% greater than before the crisis.

It is expected that even when the lockdown in many countries eases, brands will still prefer contactless ways to pay and customers will be more than happy to comply.

And restaurants in some countries have been turning to Phos, a PoS software solution that turns an Android phone into a PoS terminal. This is so they can change their operating models from sit-in restaurants to delivery services and allow customers to pay via digital payments that are done through the Phos app.

And some customers are even going so far as insisting to pay via phone. Also payments firms has seen a significant increase in the volume of transactions and client numbers since the beginning of the Covid-19 crisis started. Most of these payments are from those who work in one nation and send cash back home to their family. And despite a number of their typical customers losing their jobs, there has been a limited impact on their revenues as a surge in new business is offsetting the number of those not using their services due to job losses.

Many in the Fintech industry believe that Covid-19 hasn’t changed the trend for digital payments, but rather accelerated it.

2. Lending

With revenues down across the world, businesses are looking at borrowing money to keep afloat. Some might need capital for investment in new business models that have to be adopted due to the current crisis.

While there are lots of grants and government-backed loans available at the moment to UK businesses and for companies across the EU and afar, there are also a lot of Fintech companies that are looking to lend to SMEs. Lending will become an important part of the process for business growth, with businesses who are able to secure loans and repay them gaining access to higher amounts of credit.

Of course, this will have to be done digitally. No longer will companies need to visit their local branch or financial services office to enquire about a loan. Instead, businesses will be able to apply for credit through one of the many mobile financial solutions available. When accepted, they will get instant access to cash. Therefore, the cash flow of organisations can be better managed and when businesses need cash for investment, they can get it.

This is a great way to help businesses evolve and improve the economy in the short term during uncertain times and in the long run.

3. Security

Another factor that will need to be directly addressed is the security of digital payments and online financial solutions. According to research, about 7.6% of the transaction value of digital payments is digital payment fraud, so organisations will need to determine a way for digital payments to be more secure.

However, as the need for payments is increasing, so is the technology to secure systems, as the systems are often compromised when customers themselves are giving sensitive information away that allows criminals access to digital payment systems.

Therefore, in the long term, digital payment security will need to secure the ‘human’ element of the process and not the technical side. If customers are educated not to use links that are unverified and not to give information away, then the chances of fraud are significantly smaller.

And there is a sentiment that digital payments and mobile financial services are more secure than physical cash. It’s also easier for fraud to be detected, traced and stopped when it is digital compared to physical cash that can be quickly hidden with no trace.

The Era of Financial Services

There is, and will be for the foreseeable future, a significant need for mobile financial services across the world. The Covid-19 pandemic has probably accelerated the need for these services, but there was already an increasing demand for them anyway.

In the future, this demand will continue to increase. This is because the digital behaviours of customers and businesses will be hard to break. There are significant benefits too, with faster payments, quicker access to credit for business expansion and more secure systems leading to a more fluid financial life, both during and after the pandemic.

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