The pandemic's emergency workarounds are here to stay
With the world relying on virtual communication methods and reducing physical contact due to the pandemic, innovative fintech solutions are essential to protect people while offering comparable financial services and capabilities prior to COVID-19.
These groundbreaking, convenient, and useful services allow consumers to save, spend, bank, and invest safely and efficiently, all from the comfort of their own home.
In the past, alternative financial services were often seen as too much on the fringe for the average person. These days they are much more common—and necessary. There have been several trends in alternative financial services that have made an impact in 2020 that financial institutions, merchants and payment companies need to pay attention to.
Staging. From curbside pickup and contactless delivery, storefronts have been transformed into pickup centers, with homes and businesses becoming delivery destinations for just about everything. This transformation is thanks in large part to apps and websites that simulate going to these stores and restaurants.
Everything can be predetermined, from the item to any relevant custom elements and payments, in advance. With that, curbside pickup and contactless delivery are both easier and more effective. But that is not the only way the “staging” concept will continue to evolve in the age of COVID-19. Soon, we'll be seeing more automated in-store experiences with ordering and payment via app or website, and pickup at the business with a code or receipt releasing the purchase mechanically without any human contact or interaction.
Contactless Payments. Who wants to handle a credit card or cash in an era of pandemic pandemonium? Smartphones with Apple Pay, Google Pay, and Samsung Pay all offer contactless payments so neither the cashier nor the customer need to establish physical contact, avoiding germs and viruses. Even Fitbit has gotten in on the action with its own contactless capabilities.
These contactless payment methods are not only safer during the pandemic, but they're also simpler to use and more secure than credit cards. Expect to see more stores requiring contactless payment as opposed to only a “nice option” in the coming years.
Digital currencies. With governments like China already investing millions of dollars in digital currency, many more governments, corporations, and individuals will soon do the same. Digital currency will steadily gain adoption, becoming a stable investment instead of an unknown risk. And this trend will continue as companies expand across the country to integrate cryptocurrency with traditional banking and transaction methods, making it more accessible to more people – especially in financially underserved areas.
Cybersecurity. Cybersecurity as an industry will continue to grow, especially as hackers and other bad actors seek ways to profit from the broad payments sphere. Ransomware, in particular, is becoming more common with major businesses and governmental entities. If not properly dealt with, this could spell financial ruin for many due to rampant data loss or cash flow problems.
Digital financial services are particularly primed for cybersecurity threats by the very nature of technology. However, traditional banks and other major brick-and-mortar organizations tend to lag behind as cybersecurity threats become more advanced. Cybersecurity needs to adapt and continually advance, including outside of digital financial services and other technological industries.
Online-only digital banking. Initially online banking was introduced to cut down on overhead costs and offer better rates to consumers. Now, in an age of social distancing, online banking has become even more popular. While many traditional financial services and banks have become household names among consumers, there are plenty of more innovative or socially conscious online banking solutions that show promise, including Greenwood Bank, Aspiration, Simple, Wealthfront, Oxygen, and ableBanking.
Other online financial products for everyday people. As consumers spend more time in front of their computers, tablets, and smartphones during the pandemic, whether because they are working from home or unemployed, they are discovering new ways to manage their money online. These include multiple options for online payment processing (Cash App, Paypal, Venmo, etc.), budgeting (Clerkie, EveryDollar, PocketGuard, Personal Capital etc.); investments (Acorns, Robinhood, Betterment, Stash, etc.), and paycheck advances (Earnin, Albert, Brigit, Empower, etc.).
The pandemic has forced numerous people out of work and away from the public, reducing in-person physical interactions. This has only served to supercharge alternative financial service options, including more reliance on staging, contactless payments, digital currencies, online banks, cash-advance apps, and countless other cutting-edge solutions.
The industry was already on this path pre-COVID-19, and it's only going to accelerate now. The pandemic's socioeconomic impact has cemented alternative financial service options as money-management mainstays and payment-processing pillars rather than pure alternatives.