The coronavirus pandemic has impacted business of all sizes, in all sectors, across all nations, but while some have managed to pivot their business to make the best of a bad situation, others are facing an existential crisis that few, if any, saw coming.
And it seems one sector is thriving more than others, as digital banks have used the conditions created by coronavirus to as an opportunity to increase industry security and enhance user experience.
Is the global pandemic helping to ensure that banks are less susceptible to malware viruses and, in turn, helping to make them coronavirus proof?
It’s no longer the done thing to be in close proximity to others. Touching is definitely off the table. Contactless payments are encouraged over cash, and digital banks have been quick to seize on the opportunities this has presented.
The bad news is that this hasn’t gone unnoticed by cyber criminals, who are using uncertainty around the virus and what we can and can’t do as part of our daily routine to scam people out of their data and cash. But the best FinTech companies have also seen this as an opportunity to improve cyber security standards.
Here are five opportunities the coronavirus pandemic has created for digital banking and FinTech.
5 opportunities Covid-19 has created for FinTech and digital banking
1. Increased industry security
Banks and other Financial Institutions (FIs) have been a major target for scammers since the start of the pandemic, as cyberattacks between February and April alone have spiked an astonishing 238 percent. The increased amount of threats has encouraged companies to face the situation head-on, revisit the AML and KYC procedures and implement new safeguards.
“Putting more safeguards in place will benefit market players long after the crisis has blown over, as market players will be better equipped to deal with the constantly evolving digital threats,” said A. Selemonaitė. To combat pandemic-related threats themselves, ConnectPay has launched a payment verification app, adding an extra layer of security to its system.
2. Growth of digital payments market
The increase of digital payments is well reflected in the e-comm boom. Along with the World Health Organization (WHO), which encouraged going cashless, the crisis has had a significant stimulus to the growing amount of e-payments. A. Selemonaitė noted Sweden’s example: amidst the uncertainty, Sweden’s central bank signed an agreement to gain access to EU TIPS platform, which will act as the basis for the country’s own platform for instant payments.
“Sweden’s approach shows that in order to be in a better spot to satisfy increasing demand for faster, more convenient services – you need to be proactive,” Selemonaitė explained. “We follow this approach too: having realized our clients’ needs for greater options amidst quarantine, we integrated more payment methods into our Merchant API.”
3. Accelerating digital banking development
As banks had to severely limit their working hours during the lockdown, digital banking picked up the slack to accommodate the financial needs of people working from home. “As the new wave of customers sieged the system, faster development of banking services took precedence,” she explained.
In the US alone, over 45% have changed the way they bank amidst the crisis, and based on a European customer survey by McKinsey, there has been a 20% increase in digital engagement levels in parallel with a significant decrease in the use of cash. According to A. Selemonaitė, this shift to online will remain even after COVID-19, further accelerating digital market development.
4. Enhanced customer experience
According to McKinsey, customers, who are highly satisfied with their digital banking experience, are two-and-a-half times more likely to open new accounts with their existing bank than those who are just merely satisfied. The aftermath of COVID-19 should continue down the path of developing simplified UX to attract and retain clientele.
“Although requiring meticulous work, constant UX evaluation can greatly benefit product credibility and client retention, for instance, our first UX update led to doubling our monthly conversions,” said A. Selemonaitė. “It is likely that we will see a more customer-focused approach in the post-crisis industry too.”
5. Catalyst for FinTech companies
The ’08 financial crisis gave a boost for the Fintech industry, as, at the time, people were losing trust in the system, and in legacy financial institutions. In the aftermath, some entrepreneurs parted ways with the concept of traditional banking, aiming to present the market with a more technologically sophisticated solution.
“This time, the crisis could have an even greater impact for FinTechs, as well as RegTechs, as they rely on solutions FinTechs can develop,” added A. Selemonaitė. “We collaborated with the Bank of Lithuania and leading FinTechs to develop a prototype of a RegTech solution, automating FIs reporting; this shows how unfavorable circumstances drive the need to innovate across interconnected sectors.”
As countries are starting to ease lockdown restrictions and opening up borders, the real impact of the pandemic will become apparent. That said, current circumstances will undoubtedly play a vital role in the future of digital banking.