As the impact of COVID-19 on the digital banking industry is beginning to unfold, the pandemic seems to be a game-changer for the fintech industry.
S&P Global said that their base case for recovery assumes economic rebound in 2021 following the release of a vaccine for the coronavirus in the middle of the year.
There is no doubt that the COVID-19 pandemic has fundamentally impacted the consumer behavior worldwide. The digitally-enabled financial services have been continuously improving themselves and rapidly changing over the years, with new disruptions and innovations. Even before the virus-hit, the fintech industry was delivering products and services through robust technologies and digital transformation which in turn were changing the consumer behavior. Moreover, the previous year experienced a significant growth of UPI-based payments, mobile-based lending, and many more, but the COVID scenario has accelerated it and has become a new normal.
It’s a fact that consumer spending and shift in priorities can directly impact consumer lending. At the initial days of the lockdown, consumer behaviour was observed to be conservational where people were holding on cash for uncertain times ahead. However, as time passed and gradually the unlock phase started, the uncertainty within the people went down. The consumer demand for various things rose back and their appetite for online shopping and embracing digital services was rising day-by-day. People were focusing on online grocery platforms to buy essentials, at-home entertainment, virtual fitness solutions, etc. and slowly started finding new ways to engage themselves and spend money on things like a virtual cocktail party, house makeover, digital housekeeping services, online course, or skill upgradation, starting a book club, short nearby vacation etc. We are seeing a shift in demand patterns.
Digital banking and payments boomed, once a convenience have now become a necessity. I am witnessing a rise in internet users in small towns and how they are becoming more comfortable to do transactions online. The digital banking companies will see more demand from this new base of potential customers with products designed around it.
These demand more innovation capabilities for everyone and more opportunity, and especially for the Fintechs, who have already begun to respond and are introducing new business strategies to gain. While the RBI announcement of the moratorium on repayment till August 31st had a substantial impact and brought relief among the borrowers in these trying times, however, customers started paying their dues as the uncertainty reduced. The customers’ expectation is evolving post-pandemic.
As the impact of COVID-19 on the digital banking industry is beginning to unfold, the pandemic seems to be a game-changer for the fintech industry. I believe that what demonetization did to the digital payments, COVID would do the same for the fintech. As the demand and acceptability has gone up significantly, the industry is more leveraging tech-solutions, automation, and cloud-based processes to upgrade its services and provide complete end-to-end contactless transactions, virtual or e-cards for debit or credit money, etc. Technology is the only object that can help the industry to serve the present as well as the future. The customer behavior is decisively changing.
As the industry is experiencing a huge growth in the customer base, companies should also focus on the other aspects of the products which will help them to build a compact solution and will provide a long-term benefit.
Evolution of new needs and choices – As the world is changing, niche opportunities and new way of serving will be the norm. Companies should look into reimagining the product portfolio, which will help them to cater to micro-segments of customers. We expect customers to be more value-conscious, spend cautiously as well as more funds will be allocated toward safety, skill upgradation, upgrading day to day living.
Digital innovation should be the operating system of a business – Technology has not only provided companies to set up alternative remote-working infrastructure for their employees, but also provide the ability to be fully operational via its digital service, during the lockdown situation. Companies should now focus on introducing new customer service models, which is agile and can truly optimize operational efficiency and increase flexibility.
Focusing on the empathy of customer service – The coronavirus situation helped the companies to understand the use of practical tools in enhancing customer service on a human level. Initiatives like video customer service and the use of bots for the correct assistance help to deepen relationships and trust with the customers, and also create a positive memorable customer experience. The consumer awareness has also increased, thanks to the technology adoption.
The pandemic situation has increased the ability of an individual to be nimble and become more flexible to adapt to the changes around us. The ability to innovate and try out new products and services has given a new light of hope to businesses to look out for different ways and provide better service to their customers, which further spot opportunities for new revenue streams. Therefore, companies should continue to focus on their strategic transformations and build a resilient organization for the new future.
(By Ashish Goyal, Co-Founder and CFO at EarlySalary)