Five opportunities that COVID-19 has created for the digital banking sector

While the virus has presented many challenges, it has also opened up opportunities for increased industry security and customer relationships. Agnė Selemonaitė, Deputy CEO at ConnectPay, explains.

1. Increased industry security

Banks and other financial institutions have been a major target for scammers since the beginning of the pandemic; in fact, cyberattacks between February and April alone spiked an astonishing 238%. The increased volume of threats has encouraged companies to face the situation head-on and implement new safeguards.

“Putting more safeguards in place will benefit market players long after the crisis has blown over, as market players will be better equipped to deal with the constantly evolving digital threats,” says Selemonaitė.

2. Growth of digital payments market

Alongside the World Health Organization encouraging us to go cashless, the crisis has stimulated the growing amount of e-payments. Selemonaitė notes Sweden’s example: amidst the uncertainty, Sweden’s central bank signed an agreement to gain access to EU TIPS platform, which will act as the basis for the country’s own platform for instant payments.

“Sweden’s approach shows that in order to be in a better spot to satisfy increasing demand for faster, more convenient services – you need to be proactive,” Selemonaitė explains. “We follow this approach too; having realised our clients’ needs for greater options amidst quarantine, we integrated more payment methods into our Merchant API.”

3. Accelerating digital banking development

As banks had to severely limit their working hours during the lockdown, digital banking picked up the slack to accommodate the financial needs of people working from home. “As the new wave of customers sieged the system, faster development of banking services took precedence,” says  Selemonaitė. In the US alone, over 45% of people have changed the way they bank amidst the crisis, and according to a European customer survey by McKinsey, there has been a 20% increase in digital engagement.

4. Enhanced customer experience

The aforementioned McKinsey survey showed that people who are highly satisfied with their digital banking experience are two-and-a-half times more likely to open new accounts with their existing bank than those who are just just satisfied. The aftermath of COVID-19 is expected to continue down the path of developing simplified UX to attract and retain clientele.

“Although requiring meticulous work, constant UX evaluation can greatly benefit product credibility and client retention, for instance, our first UX update led to doubling our monthly conversions,” says Selemonaitė. “It is likely that we will see a more customer-focused approach in the post-crisis industry too.”

5. A catalyst for fintech companies

The ’08 financial crisis gave a boost for the fintech industry, as, at the time, people were losing trust in the system, and in legacy financial institutions. In the aftermath, some entrepreneurs parted ways with the concept of traditional banking, aiming to present the market with a more technologically sophisticated solution.

“This time, the crisis could have an even greater impact for fintechs, as well as regtechs, as they rely on solutions fintechs can develop,” adds Selemonaitė. “Unfavourable circumstances drive the need to innovate across interconnected sectors.”

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