Not since The Great Depression has the world witnessed such a dramatic contraction to the economy and our way of life. The pandemic has forced governments around the world to grapple with the extremely challenging balance of enforcing social distancing measures, shuttering businesses, and trying to minimize the economic fallout.
With a vast majority of businesses forced to close their doors and cease trading, the economic blow has been felt worldwide. Foreign investors have pulled about $25 billion from developing Asian economies, and over $16 billion was taken out of India. Half of Australia’s working population are on some form of government benefits after two months of lockdown.
29 million people in Latin America could be subject to poverty, while over 30 million people in Germany, France, the UK, Spain, and Italy have applied for government wage support. The pandemic can likely drive Sub-Saharan Africa into its first recession in 25 years. More than 33 million Americans have filed for unemployment insurance as their country’s GDP fell by 4.8% percent during the first quarter of 2020—the largest quarterly GDP decline since the fourth quarter of 2008.
In the face of COVID-19, banks have played a central role in supporting the economy by providing extra credit to both households and businesses to weather the financial downturn. The banking industry will not be intact, however. So how will it change after this crisis and the profound impact it will have on consumer behavior?
The rapid migration to digital for banking
Digital migration has long been a key topic of discussion in the banking industry, but less that 15% of organizations had the effective solutions, processes, and strategies to run their businesses digitally. Over the decade after the global financial crisis, major banks were slow to embrace digital, opening up the market for new players, micro-banks, and even fintech companies to establish themselves.
COVID-19 forced the banks to undergo a rapid migration to digital. They had to rapidly develop the capabilities to provide seamless services and experiences to customers while managing the adjustments required by. telecommuting. Everything that could move online and virtual did so. The organizations that failed to make the pivot in time suffered missed business opportunities, poor brand images, and dwindling customer satisfaction.
The rise of new payment solutions
The experience of COVID-19 will catalyze the rise of “tap-and-go” cashless payments via credit and bank cards as well as contactless technology in smart phones and devices. Consumers and brands in Asia have long embraced these digital solutions, but as people worldwide seek to avoid contracting the virus, these innovations are seeing wider adoption across regions.
This has proven a boon for public health, but people are also turning to credit and payment solutions like After-Pay and Affirm to meet their costs of living with diminishing household incomes. There is, however, much speculation as to how banks and credit providers will deal with potential bad debts. Many are also concerned about the effect this may have on households who cannot meet repayments.
What will banking look like after COVID-19?
The pandemic has sent banks into overdrive to deliver or implement digital solutions that will help them replicate the personal touch and context of face-to-face interactions. How will financial institutions enable customers to complete routine transactions such as account opening and loan application without physically visiting a branch? What are the tools they need to introduce frictionless digital processes that will lead to consistently relevant digital customer experiences?
The right omnichannel martech stack can effectively gather the necessary data and steward customers through the funnel at their own pace to achieve desired outcomes. Moreover, the use of intelligent automation tools allows banks to automate many tasks, thus accelerating response times and freeing up bank staff for more personal customer interactions.
How banks respond to their customers during this crisis will be a critical turning point to how their brands are seen for years to come. With a plethora of data at their disposal, banks can harness them for insights that will help them meet individual customer needs. For example, they can use the data to identify those customers who may struggle to meet their financial obligations and require additional support. Using the right omnichannel martech platforms, they can then proactively contact these customers to offer personalized customer service solutions such as converting credit card debts into home equity lines with fee deferrals or mortgage holidays for homeowners who need liquidity.
COVID-19 has brought so much confusion to the world. However, one remains certain about banking after this pandemic: Agility paired with an embrace with digital will be the cornerstone of their survival—and eventually, success. The decisions banks make today will be fundamental to how their brands will be defined post-pandemic and for years to come.
How do you think banking will change after COVID-19? Leave a comment below or speak to our experts to see how we can help.
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