What will the world look like when the pandemic is over? At present, no-one can be sure given the rapid pace of change experienced in the last year. However, there are signs to suggest that our social and economic structures are shifting, and what is certain is that the world will undoubtedly appear very differently than it did pre-COVID.
For example – the five-day working week – a standard feature of modern society – now appears to be threatened by due to advancements in workplace technology as well as an enforced successful period of working at home.
Instances of such change are happening over the entire breadth of society, and the world of financial services hasn't escaped this. In the last few years, Europe's fintech sector has boomed as entrepreneurs been employed by to provide an alternative to the traditional banking system. Generally smaller and more agile than the incumbents, fintech companies happen to be able to create services that mesh better with a hectic modern lifestyle. However, given the changes that are likely to derive from COVID-19, will we soon see consumers switch at an even greater rate?
The changes brought forth by COVID-19
The financial sector had been undergoing significant change prior to the pandemic. Regulatory evolution and advancements in technology had already brought forward measures for example open banking, and as previously mentioned, changing customer demand had led to increased competition and a number of new entrants to the marketplace.
COVID-19 has acted as a catalyst, rapidly intensifying the interest rate of some of these changes. For instance, from the perspective of financial institutions, many found themselves having to promptly shift to a type of working from home after having been previously pessimistic to its benefits. This effected the delivery of both back and front end services, as organisations needed to invest time and resources into adjusting to the new normal.
The move toward home-work also changed the outlook from the consumer. Now spending less time in busy town centres, the average consumer will spend more time managing their finances using digital and mobile channels, rather than traditional in person services. Furthermore, using the global employment market on especially unsteady ground, many consumers are looking for flexibility in the services that they use to able to adapt to any unforeseen change.
Why the fintech sector continues to be perfectly placed to take advantage
Whereas traditional banks needed to drastically adapt their ways of work to not being in the office, for a lot of new fintech companies this was already the conventional. As such, some customers of traditional banks may have found themselves receiving comparatively worse service than they did pre-pandemic. Many customers will have managed their finances in traditional brick and mortar locations. As such, with consumers needing to rapidly shift to using websites, mobile apps, or over the phone – a number of the incumbents may not have had the required capacity in these services to deal with the increased demand, and this will have led to bottlenecks. Newer fintech's will often have no physical presence whatsoever, instead having built up their services with digital outlets in mind. As such, they were perfectly placed to adjust to this shift.
A similar pattern is going to be witnessed should a customer or business attempt to open a new account or access additional finance. Traditionally, this will require the applicant to produce physical documents to ensure their identification, and their credibility as a borrower. With brick and mortar locations either remaining closed or operating in a severely reduced capacity, this inhibits ale many traditional banks to process these new applications, again resulting in a backlog. Some fintech's meanwhile have used technology that allows for this process to be done digitally, utilising automation to make sure that the process is smoother.
Many consumers – having been forced to employ technology to manage their finances – will have also been impressed with the greater convenience, and will seek to switch to using digital forms more permanently. This means that what they look for from their financial service provider may change. For example, this shift will see aspects such as the app user experience, digital account opening, and remote claims be important in determining what service to use. While the traditional banks can and do provide these services, in many cases they are hindered with to build on top of legacy software, and a lack of expertise when compared to newer fintech's, many of whom will have been established with these features in mind. This will mean that they will be well placed to take advantage of the newer consumer demands because of the higher quality of their features provided.
Making money go further
The average consumer will be seeking ways to make their money go further. With the global economic outlook looking precarious as you would expect, most people will look to sure up their finances. This is because the pandemic has made many people realise that it isn't viable to live paycheck to paycheck, and has shown the importance of having a financial backup plan and the benefits of having another income source, such as owning income producing assets. Despite the fact that more people are now looking to involve themselves within their finances and investing, the barrier to entry is still very high for those starting out as investors with regards to accessing and effectively managing investments. As such, a banking platform which allows consumers to manage all their financial assets in one place, utilising technology for example automation to grow the value of these assets can be really well placed to capture share of the market.
COVID-19 has already redressed the world in a fashion that used to be unthinkable. We've seen mass upheaval to the way we live, work and spend our money, and also the financial sector has had to scramble to satisfy expectations as society changes around it. This has led to the growth of a quantity of new companies who've risen towards the challenge by offering greater flexibility along with a better standard of service to consumers. While for the time being this appears to be the start of a revolution, can be whether this will continue once we emerge from lockdown.