The novel coronavirus has been so monumental in its impact on society at large, future historians may find themselves referencing time in terms of "pre-pandemic" versus "post-pandemic" events. Like so many elements of consumer behavior, the use of cash has been subject to a shift between then and now. As we've discussed a number of times in this space, cash in the 21st century isn't used quite as abundantly as it has been in the past. That was the case long before anyone had even heard of the term COVID-19. In other words, that was then and this is now.
More than a year removed from the first documented COVID-19 case in the U.S., the response to slowing the spread of the virus appears to have only expedited the rate at which Americans are abandoning legacy payments like cash in favor of digital or electronic means.
It raises the question: How should individual banks, and the overall banking ecosystem, respond to the dramatic shift?
In a survey of approximately 2,000 Americans that was conducted by Deloitte as part of its "HX in Uncertainty" study (HX stands for 'human experience'), the company set out to discover to what degree, if any, COVID-19 influenced their life in a variety of areas. That includes everything from how the way they interpret information has changed to what factors enable them to determine whether a space was safe (e.g. is it inside or outside, how many people are there, length of stay and so on).
Respondents were also asked about their digital payment journey and whether the use of mobile wallets, online banking, smartphones and other technological methods was something they would continue moving forward or if they'd go back to legacy payments.
80% expect to use digital payments more often
Unsurprisingly, given how prevalent digital payments are, a majority of consumers who were reliant on legacy payments prior to the pandemic said they would likely rely on digital payment even in a post-pandemic world. In fact, more than 8 in 10 felt this way.
That compared to just 13% of people who prefer paying by check, and said that they fully intended to go back to old school when the virus is gone.
"FIs that have already invested in the technology should continue to do so."
What's the best way for financial institutions to appropriately respond? Given that the vast majority of legacy payment adherents intend to maintain or ramp up their digital appetites, those that have already invested in the requisite technology should continue to do so.
Consider the mobile wallet
This includes new offerings that may resonate with clientele. One popular emerging option is mobile cash technology. Again, as we've mentioned in previous blogs, cash has not completely lost its relevance, especially as it is applied to certain transactions. Mobile cash technology via debit driven mobile wallets are therefore a great intermediary solution combining the portability of smartphones with the functionality of paper currency.
Speaking to ATM Marketplace, John Clatworthy of Cash Connect said mobile technology is definitely catching on, and FIs that have invested in the tech are reaping the rewards.
"Banks have seen a pretty good adoption of that service from customers prior to the pandemic because it does offer additional convenience and security," Clatworthy explained. "But in this era, where [some] people are hesitant to be in physical contact with things like an ATM, it has certainly seen an increase."
Double down on advanced ATM technology
Customer-facing technology, as exemplified by ATMs, has risen. But more customers are interested in state-of-the-art capabilities that make these machines even easier to use — and more contact-free. These include cardless ATMs, terminals that seamlessly pair with smartphones, and ITMs.
"Customers vastly prefer to use their personal bank's ATMs over the universal resource ones at competitive institutions."
Furthermore, customers also vastly prefer to use their personal bank's ATMs over the universal resource ones at competitive institutions. In a survey conducted by Mercator Advisor Group, nearly 95% of respondents said they were more likely to use their own bank's ATM versus others'. This likely stems from customers' desire for familiarity and security, and concerns over ATM fees.
Take a pulse of your customers' payment preferences
In a similar vein, while customers do enjoy variety, they're also creatures of habit and tend to turn to what works for them. Therefore, FIs should hone in on what payment platforms their customers prefer so they can more effectively customize the manner in which they spend their money, according to Clayton Weir, chief strategy officer for embedded banking platform provider FISPAN.
"The point in the value chain we should pay attention to in thinking about that POS transaction, whether online or in-store, is that it absolutely is about the experience of the consumer," Weir told American Banker. "That plays into everything a bank is trying to do on the retail side of the coin."
Innovation will have a major influence on how and in what way banks in tandem with tech developers can create custom-built payments.
By pairing you with the most up-to-date technology money can buy, BranchServ can help you put your Best Branch Forward today, tomorrow and well into the future. Contact us to learn more.