Coronavirus is the gateway for digital ID and transactions, and banks must lead
Around the world, many countries now face a new period of uncertainty caused by the COVID-19 pandemic.
While regional lockdowns had temporarily started to ease, the prospect of a second wave has caused some countries to reintroduce restrictions, a situation that may be ongoing and become a "new normal" as part of the global effort to combat the virus.
Amid these challenges, society has been forced to digitize many of its core functions at an unexpectedly fast pace, sparking unprecedented levels of innovation in a short space of time. This has led to an emergence of new digital services and triggered the transformation of key sectors including finance, education and health care. With growing levels of unpredictability around how the pandemic will unfold, there is a societal expectation that access to comprehensive digital services will continue and improve.
This expectation is particularly prominent in the banking industry, which rolled out an expanded range of digital services during the early stages of the pandemic to enable customers to manage their finances safely from home. New services include virtual appointments, expanded features for mobile banking and payments, and streamlined authentication processes for customer service.
The COVID-19 pandemic sparked a huge surge in demand for online banking; the United States is reported to have seen a 200% increase in new mobile banking registrations in April 2020, which is reflective of a broader global trend. Similarly, in the retail industry, there was a significant increase in the number of consumers using online shopping for the first time, and future e-commerce purchases from new or low frequency users are expected to increase by 160%.
While the increase in online banking services was driven by the urgent requirement for people to manage their finances without leaving home, many customers have since recognized the convenience of online access, and are calling for more comprehensive digital banking services. The pandemic also prompted many within the older generation to access digital services for the first time.
The pandemic has encouraged banks to invest more time in developing tools that allow customers to manage their finances remotely. By remotely we mean allowing customers to access their banking information independently without any third-party support, said Mario Brkić, co-chair of the Open Banking Expert Group at Mobey Forum. The emerging social and behavioral changes caused by the pandemic require banks to undertake a careful evaluation of which financial matters can be managed in person and what can be dealt with online.
As well as rolling out new digital services, banks now have an opportunity to respond to the growing demand for digital identity. The pandemic has triggered a sharp increase in customers needing to verify their identity online. More people are relying on digital identity schemes than ever before, said Jukka Yliuntinen, co-chair of the Digital ID Expert Group at Mobey Forum.
In our research, "The Mobey Long Take — Post Covid-19 Digital Identity," we found that throughout the pandemic, banks have played an important role as a distribution mechanism for many of the government intervention and support strategies. They must now seize the opportunity to take this a step further and lead the development of a fairer, more trusted approach to digital identity.
With more customers utilizing digital services, banks also have an opportunity to use the data to drive additional value for customers. However, this approach is not without challenges. Data privacy and machine learning fairness are two of the most complex data-related challenges for banks, said Amir Tabaković, co-chair of the Data Privacy in the Age of AI Expert Group at Mobey Forum.
Banks have a long history of credibility and trust and their ability to demonstrate this through the secure management of customer data will be critical to creating confidence in new services. In rolling out new services, banks also have an important responsibility to ensure they remain accessible to all demographics. By sourcing feedback from the newest users of digital services, specifically those who are using them for first time, banks can test if their design is intuitive to customers.
COVID-19 has irrevocably changed consumer habits and expectations. As we navigate the path forward, banks have a window of opportunity, to reflect on the learnings to date and use them to build a digital-first banking ecosystem that will serve customers for the years ahead. It is through this forward planning that the banking industry can help the global economy emerge stronger than before.