A 2015 study showed that a third of millennials believed that by 2020 they wouldn’t need a traditional bank. They were right. Over the past five years, digital banking platforms have emerged to disrupt the banking industry in response to the changing needs of an increasingly digital-first generation. On top of that, the current global pandemic has exposed the inefficiencies of traditional brick and mortar banking and propelled the acceleration of consumer adoption and comfortability with digital banks as people find a “new normal.”
Here are three ways in which digital banks proved their power during the global pandemic:
BRICK AND MORTAR BANKS CLOSED
At a time when everyone was encouraged to stay home and practice social distancing, being able to manage your finances from home became a necessity. The banking model that was initially used by tech savvy early adopters quickly became a mainstream banking option. As social distancing measures forced brick-and-mortar banks to close, consumers turned to digital banking solutions and discovered the ease in which they could deposit checks via their mobile phones or make person-to-person payments - all from the comfort and safety of their own homes without contact.
According to a global survey from N26 - almost 63% of Americans planned on opting for contactless payments over cash because of COVID-19
Traditional banks will invest in accelerating their digital efforts but not all will succeed as the industry becomes more competitive and consumers find favor in greater transparency, personalization, lower costs and more innovative products overall.
OPENNESS TO GO CASHLESS
The pandemic also pushed more people to choose to go cashless and instead shift toward contactless payments for a secure and socially-distant way to pay. According to a global survey from N26 - almost 63% of Americans planned on opting for contactless payments over cash because of COVID-19. Contactless payments promote safety, health, simplicity and accountability and people love the speed, convenience and ease of being able to pay without digging for cash or cards in a wallet. During the height of the pandemic, N26 accelerated its integration of Apple Pay and Google Pay, two of the most requested features for N26 in the U.S., to help ensure the safety of their customers and make contactless payments more convenient.
There’s no doubt that the Coronavirus outbreak caught the world off guard, and stay-at-home and social distancing measures fundamentally changed the way we interact with our communities and our finances. For the past few years, user behavior (particularly among Millennials and Gen-Z) was already shifting more and more towards phones and mobile devices. However, the pandemic forced adoption of mobile technologies on a much larger scale to people of all ages as people had to find ways to work, learn and bank entirely online.
The pandemic presented a huge opportunity for digital banking platforms with the power to be nimble, especially in times of crisis, to focus on their customers and provide them with the tools they need to adapt to their new lifestyles. With the shift away from traditional brick-and-mortar banks, the increase in demand for contactless-payment solutions and evolving demands of an ever-mobile society, digital banking is no longer “the future of banking.” That future is now and is here to stay.