A question of finance

Although the global pandemic continues, glimmers of hope, in the form of vaccines, have appeared that promise the potential to get people moving again. A clear uptick in the onboarding and usage of digital banking services was expected during the pandemic. And that’s precisely what happened. Forrester reported in October that 14% of US online adults used digital banking for the first time during the pandemic, and it seems like it won’t be their last time. Add that to an additional 14.2 million US citizens who count a digital bank as their only bank, and it’s clear this is here to stay.

As digital services take priority in both neo and traditional banking structures, change is coming to brick-and-mortar branches. Banks have been reducing physical branches in favor of digital services for quite some time, which presents challenges such as access for some clients as well as risk management. As a result, banks are onboarding new technology to make services more accessible to all clients, from making transactions easier to making lending more straightforward and even automating processes such as risk management.

In 2020, the amount of savings held by individuals rose. “Forced saving,” due to lockdowns and restrictions, meant that many consumers were not spending as they usually would. And when they did spend, it was generally with an online retailer. As savings increased, spending from the start of the pandemic through September decreased to 90% of the expected figure without a pandemic. What can we expect from consumer spending and saving habits going forward? Potentially, lower-income households could be more likely to seek short-term loans to plug gaps in their finances. Meanwhile, higher-income households may be more likely to seek investments.

In 2020, consumer credit took a plunge. In late 2020, EY predicted that consumer credit would be down 5.6% for the year. Potentially, this is the result of lockdowns and various other restrictions. The exception is mortgage lending, which is predicted to grow by 3.4% in 2021. Business lending is also on the rise. During the ongoing pandemic, loans have been instrumental for small and medium-sized businesses to help their businesses stay open long term. Many have used both private and government-issued loans to do so.

Although many services have gone digital, that doesn’t mean the human experience needs to. Whether it’s in a branch, on the phone or via a messenger, the care you deliver your customers will make all the difference in whether they stay with your bank or not. With so many options out there, what will set your business apart is being able to provide services without delay and with a little humanity.

On cloud nine

The fintech industry is capitalizing on the benefits of the cloud, helping to drive the industry’s forecasted 23.84% compound annual growth rate. When the pandemic hit full force in early 2020, there was a dire need for remote self-service technology. As the crisis continues, and even after the pandemic ends, this need will not evaporate. Conversely, it may increase, especially if you consider the continuing closures of brick-and-mortar bank branches. Both individuals and businesses need the ability to open and manage their finances from a distance.

Despite early concerns regarding security and data protection, the cloud has proved reasonably secure if the right measures are taken. Zero-trust verification and encrypted data have increased cloud security in recent years. When used alongside measures such as employee education and access control, among others, the cloud proves itself no riskier than traditional IT infrastructure setups. For fintech providers, no doubt, security is at the forefront of their minds when adopting new technology, and it’s vital they make sure their systems have adequate measures in place.

Acquiring and working with data is a top priority, from onboarding and identity verification processes to account management, balance, checking, analyzing spending habits, etc. Data is key. Companies can use cloud technology to gather and store large quantities of data securely and make it accessible at any time. Cloud technology provides the agility to scale relatively easily while saving on on-premises technology infrastructure, which can be more costly to upgrade. Moving infrastructure to the cloud measures accessibility, flexibility, and scalability for both fintechs and financial giants.