The ongoing coronavirus crisis has dramatically transformed consumer behavior across the globe.
Take the food service industry as an example. A report from Supermarket
News revealed that over half of consumers in the United States have been eating at home more often during the pandemic. What’s more, many people in the country won’t be flocking to restaurants and other food service venues even after the pandemic settles down.
Besides the food service sector, the coronavirus crisis has changed people’s behavior toward personal banking. The financial sector today is much different than it was before the spread of COVID-19.
Here’s how consumer banking has transformed in response to the ongoing pandemic:
1. Clients Expect Greater Banking Security and Flexibility
The current pandemic situation has been a major financial shock for a lot of people. Bouncing back from this crisis will require relying on flexibility and extended support from banking institutions to help clients recover from their financial struggles.
Others see the coronavirus crisis as an opportunity to be more mindful of other “black swans.” They expect to spend less and invest more to prepare for what lies ahead. An example is setting aside a portion of their hard-earned salary and putting off big purchases, such as buying an expensive high-profile vehicle.
Banks will play a role in helping these types of clients. These financial institutions can offer the right insurance, investment and savings products.
2. Some Bank Branches Turn into Service Lounges
The way physical branches feel and look will change. Instead of seeing rows of bank tellers, you may find service lounges for walk-in clients. Agents will be on hand to assist clients through banking transactions using their own devices. There will also be more casual seating areas for deeper, private banking conversations.
The changes in branch layout will help support any ongoing physical distancing measures.
3. Clients May Still Visit Bank Branches for Important Life Moments
As COVID-19 wane due to the ongoing vaccination campaigns across the globe, individuals will still have a psychological need to interact with other people for important life moments. They need to feel reassured in the following situations:
• Purchasing a home for the first home
• Creating a wealth plan
• Managing generational wealth transfers
• Sending their children to a different country for quality education
This means that people can look forward to some return to “normal” after the coronavirus crisis is over — and banks can expect clients to visit physical branches to discuss important life matters.
4. Responsible Banking Becomes More Important Than Ever
Doing the right thing and behaving ethically are two things that banking clients value. They want banks to actively support their local community, be transparent in everything they do and make sure that their actions are for the good of society.
What’s more, people may view banking institutions unfavorably when they see banks focusing on maximizing profits during a crisis.
Banks, just like hospitals, are on the front line. They support clients through the crisis by donating to relief efforts, providing emergency funding and forbearance to banking customers and transmitting stimulus measures from the federal government. Banking institutions should stay aware of the reputational risk they face should clients feel they don’t receive the support they need.
5. Routine Banking Activities Remain Digital
The shift toward digital was inevitable for everyday banking activities, such as applying for a credit card, making payments and checking account balances.
Many of these tasks are habits. Once habits are embedded, they’re unlikely to change. Given that more people are banking this way due to the coronavirus crisis, you can expect these routine tasks to remain digital.
6. There Will Be Changes in Banking Regulations
Governments, central banks and regulators may change the legislation and make revisions in favor of a new banking model — one adapted to the new economic reality and innovation in payments. A couple of these changes may involve introducing requirements for online onboarding of banking customers and the regulation of virtual or digital currencies.
7. The Crisis Has Accelerated the Decline of Physical Cash
Cash use has been dropping for some time — and the ongoing pandemic has contributed to the speed of the decline. There have been concerns about physical cash transmitting the virus. What’s more, some companies are shutting down their brick-and-mortar channels, compelling consumers to buy what they want online.
The decrease in cash usage will undoubtedly affect banks. The decline in withdrawals, for instance, could result in the closure of ATMs. This may also affect certain consumer banking services, such as over-the-counter cash withdrawals and bills payment via physical cash.
Consumer banking will never be the same after the coronavirus pandemic. Banks should embrace this new normal and aspire to deliver stellar, personalized banking services that will win the trust of clients.