Financial Fitness and Digital Banking in the Times of COVID-19

Financial Fitness and Digital Banking in the Times of COVID-19

by June 24, 2020

The COVID-19 pandemic is forcing consumers to turn to digital channels. Now more than ever, banks must accelerate their digital transformation and focus on delivering tools their customers need for financial self-help, according to a new report by Meniga.

In a paper titled Financial Fitness in a Post-COVID Economy, the Icelandic software company explains how the COVID-19 health has and will continue to change consumer behavior and stresses why it is critical for banks to react rapidly or risk losing market share over challengers that are championing digital customer experience.

Citing findings from several research papers, the Meniga report notes that while many banks had begun their digital transformation prior to the COVID-19 crisis, these efforts had been limited. According to research conducted by the Digital Banking Report, less than 15% of organizations considered themselves as digital transformation leaders before COVID-19.

But with the onset of the pandemic, customers are ditching the traditional bank branch and turning to digital channels to conduct transactions and manage their finances, implying that banks must react rapidly. A report released in April by Nucoro revealed that between March 14th and April 14th, 12% of the UK’s adult population had downloaded their bank’s mobile app for the first time, showcasing the clear spike in mobile banking consumption amid the pandemic. In general Covid-19 has driven a 72% rise in the use of fintech apps.

Meniga believes that this trend will further accelerate in the future as the health crisis acts as a catalyst for digital banking, pushing banking apps to eventually become mainstream. Now is the time for banks to offer clients both a user experience and a fully equipped toolbox they can engage with and eventually enjoy using, the report says.

Financial fitness in the times COVID-19

Over the past couple of years, competition has increased substantially in the financial industry, first with the entrance of fintechs, followed by bigtechs moving into digital banking. With regulations such as PSD2 and trends like open banking rapidly taking the banking world by storm, competition will only increase over time, and banks are well aware of that.

Citing an independent survey of senior bankers across Europe, the Meniga report says that 51% of bankers foresee that banks will lose customers to challenger banks or third party providers in the post-COVID-19 climate.

In this ever more competitive landscape, one field that’s been overlooked and which banks should focus more greatly on is personal finance management (PFM), Meniga says.

Citing a Business Insider report, the paper notes that customers are more dissatisfied with their banks’ PFM services than with any other type of services their banks provide. Additionally, more than 40% of those surveyed find PFM services from non-bank providers more useful and helpful.

And with the economic turmoil associated with COVID-19, customers are demanding digital tools that give them proactive advice on how to keep more of their earnings, build their financial fitness, but more importantly, tools for them to be able to help themselves.

To help banks deliver what their customers truly need in these uncertain times, Meniga is offering a personal finance toolkit with advanced financial planning, spending insights, cashflow management, gamified personal finance fitness, and more. The solution also caters to the needs of businesses and comes with a cashflow assistant, cashback rewards, market insights, among other features.

Meniga, a company founded in Reykjavik in 2009, provides digital banking solutions and specializes in PFM software. The company has served many banks around the world including UOB, Santander, Commerzbank, Unicredit, Nordea, mBank, and Tangerine.