State shut-down orders and social distancing efforts tied to the novel coronavirus spurred “huge shifts” in consumer payments behavior that could affect long-term habits, Ondot Systems said in a new white paper.
Ondot, a Santa Clara, Calif.-based digital card services platform for credit and debit issuers, described the impact of COVID-19 as a “decade of change in just a few months” in the new report.
“COVID-19 has increased demand for digital payment solutions among consumers who see changing the way they spend money as a potential health issue,” Prasanna Narayan, Ondot’s vice president for product management, said. “This added pressure is forcing financial institutions to review their digital banking roadmaps in order to meet the changing needs of consumers.”
As a share of total retail shopping, online spending is expected to rise 15% to 25%, eclipsing less gradual growth, according to a recent UBS client note. A Boston Consulting Group study published this month said 44% of participants had enrolled in online banking for the first time.
Many recent reports showed increasing use of contactless and mobile wallets. An American Express survey said the coronavirus outbreak has spurred a greater number of consumers to consider contactless payment more now than before.
“With COVID-19, these opportunities to serve customers digitally are even more important,” the Ondot paper said. “Consumers are more hesitant to touch shared POS equipment and as a result digital wallet adoption and contactless payments have increased.”
The Ondot white paper said “digital banking roadmaps that can be years long now need to be reprioritized around the changes that consumers are experiencing and demanding right now.” The paper offered immediate, short-term and medium term areas and provided questions that financial industry officials can address as they confront the new reality of the virus era.
Card management, the Ondot paper said, “should be considered as a critical user experience rather than an add-on.”
The report pointed to the double-digit growing unemployment rate as one reason there might be large numbers of consumers changing their financial institutions in the coming months.
“As consumers look for a financial partner, they are significantly more likely to choose a financial institution that has the digital tools they seek,” according to Ondot. “Digital experiences are now the primary differentiator for opening a new account.”
To meet consumers’ needs, financial institutions “need to reassess their digital priorities.” The Ondot white paper spotlighted “self-service needs, modernizing their card experiences, and being prepared to capture increased account opening as the economy recovers.”