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Social distancing places a premium on mobile checking and payments

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We're experiencing a historic moment. While we can’t know exactly how the landscape will be changed following the current COVID-19 crisis, it will certainly be different.

One of the mistakes humans make when predicting future events is that we take known data and, from that data, create logical curves showing gradual changes over time. But most systems don’t operate that way. As author James Glieck has pointed out, “Clouds are not spheres. Mountains are not cones. Lightning does not travel in a straight line."

Another way to think about change is to recognize – to borrow a line from Hemingway – that it occurs in two ways: “gradually, then suddenly." I think it’s safe to say we are now in the “suddenly” part of the digital banking and payments story in the U.S.

From my vantage point, here are some changes we should all anticipate and how the industry might pivot.

The combination of increasing branch closures and social distancing make mobile apps all the more vital. As outlined in Cornerstone Advisors' 2020 mobile deposit benchmark report, only about 16% of all consumer-received checks are being deposited via the mobile channel. With the changes we are seeing, financial institutions (FIs) should expect a significant increase in the number of mobile check deposits during this time.

This acceleration will also be driven by the millions of households that are receiving assistance checks from the federal government. While some of those check receivers are already habitual mobile deposit users, others with no experience using the capability will need coaxing from their FI.

While reduced branch availability and visions of germ-laden ATM buttons will convince consumers to use mobile deposit, smart FIs will increase their communication, coaching, and customer support to help them with the experience. Providing tutorials, infographics, and videos online are examples of some ways FIs can get ahead of the training curve now.

Additionally, FIs need to take a fresh look at their deposit limits. While increasing limits carries risk, constricting this avenue of check deposits at this time carries a host of other risks related to customer loyalty and app store ratings.

Once customers use mobile deposit once, and then a second time, a habit tends to be created – a habit that will extend well past the time when the COVID-19 crisis has passed. Financial Institutions need to both expect, and coax, this change along.

To understand how cultural changes can drive consumer adoption of technology in unexpected ways, consider how text messaging became widely adopted in the US.

While consumer phones in the early 2000s had texting capabilities, the feature was rarely used – until voting for “American Idol” contestants came along. Suddenly, Americans’ use of text messaging exploded as viewers weighed in on the contest. Nobody returned to the “pre-texting” world after that. It became a habit. This is a similar moment for FIs and their customers.

There are other likely changes we may see that will further drive mobile deposit adoption. In the coming changes to the digital world, one can imagine financial institutions starting to charge fees to certain types of account holders when they deposit a check in a branch instead of using a digital tool.

We might also see branch footprints shrink as financial institutions see how consumers increase their mobile banking usage during this time. It’s not hard to envision some financial institutions operating with less than 100% of their pre-COVID branches – and if you think that won’t happen, just watch how this Work From Home moment changes how companies in many industries operate today.

Just as the American Idol experience changed text messaging adoption, so too will this current crisis lead to a big leap in mobile deposit adoption. Smart financial institutions will see that change coming and be ready.

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