Op-ed

Long Money, Financial Transparency and Contactless Payments Post COVID-19

How has the payments landscape changed and what we can expect in the future

COVID-19 is strongly affecting both individuals and businesses. Alongside the economic situation in general, the virus is changing particular customer needs and demands for financial products. Banks are experiencing a lot of pressure to adapt and keep up with expectations, in order to support their clients and provide relevant and timely services. 

This article offers an overview of what clients – both retail and SMEs – really want from their banks these days. 

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Corporate clients need cheaper and “longer” money

Many offline businesses have been put on the verge of extinction by the lockdown and reduced operations. Restaurants, entertainment facilities, fitness centers are among those who suffered the most. For them, the vital banking functions revolve around loans – in order to survive and pay their employees, they need flexible crediting conditions more than ever. 

When it comes to current credit products, businesses are looking for: 

  • Protection and relaxation on the loans and products they are paying for

This can come in different forms of recalculating credit: loan repayment holidays, rate cuts, term extensions. 

  • Reduction up to 0 of fees for services that clients are not using in full extent due to reduced turnover and operations

For instance, retail and HoReCa do not use financial products as much as before, with their revenue down 10-40%: they simply can’t pay the fees in full amounts and expect banks to offer conditions corresponding to their business situation. 

When it comes to new credit products, the main needs of corporate clients are: 

  • Ability to get a loan 

Even if it’s more difficult to get and requires a pledge of personal property and savings, businesses are looking for cheaper and longer loans – from 2 to 10 years, as the turnover of SMEs in different industries, especially those most affected, might take a while to recover. 

  • Dynamic lending conditions

Flexible pre-set of customizable recalculation of loan repayment conditions depending on the stage of business recovery is crucial for many SMEs to stay afloat. While I earn 50% of the previous volume – I pay minimal rate, when I start earning 70% – the percentage increases, when I’m back to my previous volumes – it increases even more, and so on. This makes total sense for a business with survival as a goal, and banks are expected to offer a flexible approach. 

  • Easy online scoring

It is rather a necessity: with the physical branches of banks and public institutions not operating, clients do not have the opportunity to get any documents and statements online. The majority of current loan conditions are unbearable for SMEs, but even those willing to go for it (because of the “make-or-break” situation) cannot provide data on the transactional history of their businesses and obtain loans. De facto, business owners are willing to provide access to their personal accounts to trusted organizations so that the entire transaction history can be uploaded and further monitored during the repayment process.

Retail users seek care and true globalization of money

Individual clients are seeking a humane approach to their financial problems and solutions to the problems that have arisen unexpectedly. These mostly revolve around technology and access to funds. 

  • Speed and cross-platform access to services

Instant transactions without borders and additional obstacles imposed by banks lead the wishlist of the retail customers. People who were caught off guard by the virus, forced to be quarantined in a foreign country, faced the problem of receiving and using their funds or getting help from friends. If you get money transfers, you might not be able to use the funds for a while: ATMs do not work, Western Union issues money once a week. This is especially crucial when you run out of money. 

Modern users more than ever need the money that flows, which can be easily transferred across platforms and used instantly through various platforms: ATMs, cards, online payments, social networks, transfers and p2p lending. This has to work in several swipes, uninterruptedly. 

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  • Support and engagement in critical situations

Many have found themselves in a nightmare come to life: abandoned in a foreign (or in a home) country, without money or with money they can’t use, without work. In many cases, governments remain out of reach (or extremely difficult to access) in terms of communication and support, complicating the already nervous situation with a lack of clarity and further action. They certainly do not provide psychological relief. 

Most people have trust in the reliability and steadfastness of financial institutions, and they are waiting for communication and support – both financial and emotional. Banks are expected to be “more than banks” and fill in this gap, calling for dialogue and offering a flexible case-by-case approach to help. Banks and fintech keeping up with the expectations include Monzo, Klarna and Atombank, who have set up financial aid centers and initiatives. 

  • Contactless and cashless payments

Reducing human interaction and physical contact comes as a priority – and so does the need for a variety of contactless and digital payments, such as mobile and QR code payments, NFC, paying for refuel without leaving the car. 

As more people get accustomed to buying things online, petitions against the use of cash in paper or metal money come up. In the UK, cash use fell by 60% during the pandemic. People believe that banks and financial institutions, together with the government, should push and encourage the population to use online money, and train those who practically do not use online services and the internet (including the elderly). 

  • Financial transparency and education

Those who have faced the need to cut regular expenses – services, clothing, subscriptions – might find it pretty difficult to manage In times of financial instability, a need emerges to centralize all costs in subscription lists and turn them off/on instantly. 

People also need help with financial planning: services to collect data from different sources of income and expenses, prioritize and provide advice on saving up. 

  • Alternative credit scoring

Some groups have been particularly vulnerable to the economic situation caused by the pandemic: students with unstable sources of income, workers of the affected industries. Those left without income often find themselves unable to get a loan, having no credit history and not belonging to groups assisted by the government. 

Here, new opportunities open up for services that can collect and analyze data to create a credit history and psychological profile: from social networks and any services with accumulated data on behaviour. 

To sum it up 

As people and businesses are doing their best to adjust to the pandemic situation, financial needs and demands also change – and a lot of pressure and expectations are put on banks. 

Offline businesses that struggle to survive to seek more flexible, customized lending conditions, reduction of fees, and simplified access to loans. 

When it comes to retail clients, they want banks to be more than banks, making sure that they will find compassion and support case of critical situations. On a higher level, people more than ever need the speed of transactions, contactless payments and entire digitalization of financial services, to better navigate the COVID-19 world. 

 

Nataly Sturza is Design Director at ANGRY.llc

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