Why Digital Banking Accelerated During COVID-19

Why Digital Banking Accelerated During COVID-19

Digital Transformation FinTech

3 minutes Read | Published July 2, 2020 | Regina Ongkiko

It’s an understatement to say that COVID-19 has changed the way that people live. It has also changed the way that businesses operate. Even the behaviors and perceptions of consumers all over the world have transformed—today’s so-called “essential goods” are not the ones most people have known for the past decades.

A very noticeable movement in the global situation is how various industries are shifting to the digital world. Corporate employees have been adjusting to a new work situation. According to Statista, 20 percent of adults in the United States are working from home during the COVID-19 outbreak. Agility PR ran a report that consumer buying behavior has also turned around: 21 percent of a survey’s respondents say that they are shopping online more frequently. Physical banks have either closed or imposed major restrictions, driving an increase in demand and usage for digital banking. 

As people start settling in what could be very soon the “new normal,” it looks like digital banking is well on its way to worldwide adoption.

COVID-19 further accelerated the digital banking trend

Before COVID-19 struck, the move to digital banking was already gaining acceptance among the financial institutions, other industries, and customers alike. According to Fortunly.com, 89 percent of Americans who have bank accounts are also into mobile banking.  But the pandemic further accelerated the adoption. 

The extra boost happened because individuals and businesses, formerly reluctant to make the transition, finally saw and experienced how digital banking could help them. With the work-from-home situations and temporary shutdowns of banks and other establishments, the logical thing to do was turn to digital. 

The Financial Brand shows that 45 percent of respondents admitted that they have permanently changed the way they interacted with their banks since COVID-19. Additionally, 45 percent of consumers used a mobile wallet payment platform in the past month alone.

The pandemic has certainly brought a lot of uncertainty, but it has also opened up the gateways to modern solutions that businesses and individuals can benefit from even beyond COVID-19.

How can digital banking help businesses overcome the COVID-19 slump?

Digital banking doesn’t only aid an individual's financial transaction needs, it also helps keep businesses running amidst COVID-19.

Conservation and management of resources

One of the challenges brought about by the pandemic is the sudden complications in financial monitoring. All forecasts made at the start of the year were put on hold. Some companies, depending on the industry, are finding themselves at a place wherein they have to dig into their savings and other resources in order to pay off fixed costs. With the world at somewhat of a stand-still, a lot of businesses are no longer making revenue.

Investing in digital banking means having consolidated and accessible data from anywhere in the world. Top executives can continue monitoring their numbers even while on a work-from-home status. Digital banking systems have made it way easier to sync all transactions with your current accounting systems so you can have an efficient and up-to-date overview of your finances and resources.

Easier loan applications

A lot of businesses are not in a good place right now and are struggling to make ends meet. When this happens, businesses can usually apply for a loan. With digital banking, this is made easier even with the pandemic in tow. In the United States, the Office of Management and Budget instructed government agencies to turn to digital forms and e-signatures to be able to facilitate the necessary processes to help businesses. 

Meanwhile, the Business Development Bank of Canada integrated e-signatures to their mobile app. By doing so they are enabling business owners to apply for a loan in 15 short minutes. 

Contactless transactions

Due to the need to minimize contact and practice social distancing, it has now become part of the norm to conduct financial transactions via mobile wallets or digital bank accounts. The majority of businesses are also encouraging cashless transactions as much as possible. Mobile wallets have been getting attention—Venmo, Apple Pay, and Zelle. 

With contactless transactions, this can facilitate a much more efficient exchange between businesses to businesses as well as businesses to their clients.

Moving forward to the future

Investing in digital banking strengthens the foundations for your business. It offers a more transparent way of keeping track of financial records, as well as a more accessible way for key business officials to take a look at the information when needed. The best thing is, these advantages remain even after COVID-19.

The future can look bleak. What businesses can focus on doing now is adapting to the new normal. While regular banking operations have changed drastically during this pandemic, there is a very big chance that these will carry over even beyond COVID-19. Though businesses are currently having challenges due to the pandemic, investing in digital banking is definitely one of the decisions that must be made. 

Even the most traditional banks are starting to digitize their processes. This is a definite sign of not wanting to get left behind. 

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