International Payments | Articles
Life after COVID-19 for financial institutions
With COVID-19 vaccines beginning to launch around the world, credit unions and community banks are looking towards life post-pandemic.
After a stressful and disruptive year, financial leaders could be forgiven for yearning for a time before quarantine. Yet, despite an end in sight, the global crisis rapidly changed customer behavior and expectations – perhaps permanently. An October 2020 report titled “COVID-19 and the Changing Financial Consumer: Impacts and Implications for FIs” by NY Pay and Phase 5 with banking users showcased the unexpected repercussions of prolonged branch closures and what financial institutions need to do to meet the new reality.
Like past financial downturns, consumers became more frugal with their spending and more focused on saving, even though nearly half saw no reduction to their income. In fact, many do not see their previous habits returning, even after the crisis ends. This disconnect correlates to the top concerns expressed by customers: the stability of investments, fear of debt and managing day-to-day expenses.
These apprehensions are also likely being faced by your customers who must manage the cash flow of their businesses, as well their personal finances. This stress means that all types of customers looked to their financial institution for support and direction during an unprecedented 2020. In fact, those who reported feeling unengaged with their banks expressed a higher level of worry.
How customer satisfaction levels changed with COVID-19
In general, financial customers are typically happy with credit unions and community banks, as their strong personal approach makes them stand out from the competition. Indeed, customers expressed an overall positive view of these types of financial institutions on the abovementioned NY Pay and Phase 5 report. However, big banks saw the largest increase in consumer trust for their level of support and COVID-19 adjustments.
A digital reckoning for credit unions and community banks?
The financial world has long been moving towards more digital practices but as the pandemic shut many branches for extended periods, this change accelerated. Those with high satisfaction attribute the impression to the presence of digital tools and the bank’s ability to offer convenient methods of service such as telephone and online. According to the October 2020 COVID-19 report referenced above, the lockdowns forced 84% of non-digital customers to begin using online methods for the first time and the vast majority – 94% – will continue this practice, even when all in-person options resume. Customers also report moving away from checks and towards other types of transfers. Any credit unions or community banks that do not offer a digital alternative to their services should be concerned.
The impact on FX and global payments
Sending and receiving money from different countries is a major part of many businesses who source products from abroad, hire internationally or ship overseas. Numerous credit unions and community banks either neglect to offer international services or require an in-person visit for transactions. As customer behavior continues to move towards digital, these approaches may no longer work. According to the survey, global payment capabilities are accelerating and financial institutions need to be able to meet demand.
How to improve your financial institution
Though the pandemic is temporary, its impact on customer behavior in the financial sector is proving permanent. The expectations and needs of individuals have changed and institutions need to adapt or risk losing out to the competition. Because large banks were quick to pivot their offerings and allow for digital alternatives, customers expressed greater trust in their brands. Additionally, the demand for digital capabilities, especially in international transactions, will likely only grow. All financial institutions need to critically examine the new needs of their customers and start taking steps to adjust their strategy to match.
2021 and beyond for financial institutions
Although many consider 2020 the year of the pandemic, the repercussions of the event will be felt for years to come and the speed at which vaccines can be administered across the world means that full branch reopenings will not be possible right away. More importantly, the nearly yearlong quarantines forced customers to adjust their behaviors and because of this, a return to pre-COVID-19 actions is simply not possible at this time. Even customers who long rejected digital options tried this method and for most, will continue this way of banking. Additionally, exposure to easier and faster transactions will only spur more desires for the latest technical capabilities. Although community banks and credit unions are well-regarded for their personalized approach, they must find a way to incorporate the new customer profile or risk losing business.
About Western Union Business Solutions
Western Union Business Solutions is a global leader in foreign exchange services and international payment enablement for credit unions and community banks. Our financial strength, technology and experience help facilitate new revenue opportunities for over 1,800 financial institutions globally. With hassle-free implementation, we offer a world-class, 24/7 digital platform where customers can send and receive foreign funds with only a few clicks. Each institution is offered a customized solution and dedicated support, with access to payments in over 130 currencies in more than 200 countries/territories. This simple, white-labeled addition can add not only a new revenue stream to any institution but also a way to help increase customer satisfaction and attract new business.