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The Coronavirus Recession could be the next big challenge to financial institutions since the late 2000s. For most fintech brands, this is the first-ever recession they’re facing.
Although traditional banks have been in a similar situation before, the Coronavirus Recession is quite different from the Great Recession. This time the economic impact is felt across multiple business verticals. Estimates suggest that advertising spend will likely reduce by 30-60% throughout 2020 and possibly beyond.
During these times, it is important to know how consumer behavior has shifted, what impact it has had on metrics – particularly new users and user activity, how fintech apps and marketers are responding to this change, and what channels can businesses leverage during these times. To help online banks and digital finance brands with this, Ravi, the CEO and founder of MoEngage, recently spoke to Ronen, the President and Managing Director of APAC at Appsflyer on a webinar. You can check it out below:
In this discussion, Ravi and Ronen answer the following questions:
Overall, the downloads and active users for BFSI apps seem to be decreasing in Asia from February 2020 till April 2020. However, online banking apps have started bouncing back since May 2020, and it seems the trend in increased users and activity is here to stay for long. Here are some quick learnings:
This recession has reshaped consumers’ channel preferences, products, offerings, and bank choices for their individual financial needs. These behavioral changes have accelerated the shift from transaction-based needs toward more high-value operations like checking account status, managing payees, customer support, and seeking safety practices for online banking. On top of it all, customers are now expecting much more personalized offerings that cater to their individual needs.
During this time, users want banking to be about ease and convenience – enabling customers to remotely open new accounts, access existing accounts from any location, and perform transactions across multiple digital channels and devices.
During the early days of the spread, the World Health Organization (WHO) advised people to use contactless payment and avoid handling banknotes as much as possible. Following this, The Bank of Korea started quarantining bills originating from local banks, keeping them isolated for up to two weeks. Likewise, the Chinese government requested lenders to disinfect physical notes and place them in quarantine.
Some financial services and banks have closed their physical retail branches and now depend on contactless experiences, like online channels and ATMs, to serve their customers.
Banks and credit unions with a robust omnichannel strategy can now differentiate themselves as a partner of choice to merchants looking to set up business relationships virtually.
Even after the pandemic passes, digital banks will have long-term relevance. The growing popularity of neobanks and fintech apps (like peer-to-peer lending and broker apps) will play a key role in accelerating the digital adoption of banking.
Did you know that neobanks offer 42% more features in their mobile apps than traditional banks, and boast two times the login speed? Traditional banks that quickly learn from the lessons from digital financial institutions are more prepared to compete with both during the coronavirus pandemic and after it is over.
People are increasingly expecting personalized offerings that cater to their individual needs, and fintech brands need to leverage data to fine-tune their communication to deliver on those expectations.
Leveraging customer segmentation data is necessary to predict and meet individual customer needs. For example, to identify which customers are better positioned to ride out the crisis and those who will need more active management and outreach. From here, brands may need to develop specific, well-defined solutions for the latter customer segment. While some brands with an online presence already have access to this data, those that do not need to step up and quickly adopt the right tools needed that can provide them this information. A good starting point is MoEngage’s intelligent cloud platform that can seamlessly integrate with your existing toolkit. If you’re interested, you can request a demo here.
Singapore’s DBS has taken the following measures to provide its business clients contact-free digital banking:
The rise of digital leaders such as Amazon and Netflix has primed consumers to expect premium online interactions in all areas of their life – banking being a core part. According to McKinsey, customers who are highly satisfied with their digital experience are 2.5X more likely to open new accounts with their existing bank than those who are merely satisfied; they are also less sensitive to price and generate more positive word of mouth.
Unfortunately, there is an increase in consumer frustration on finance apps due to broken digital journeys. According to a recent Lightico survey, 56% of banking consumers report that they have been redirected from online banking interactions to physical locations – and 48% say they’ve been asked to print, sign, and email papers while banking online! These numbers are alarming because a broken experience adds up to the negative influence your brand is having on your consumers – and can be the key factor that drives them to switch brands.
Finance brands need to ascertain what systems and technology will sync and fit well with their legacy systems – what they currently use or have the ability to upgrade. While developing such systems in-house is an option, banks will need a dedicated innovations-focused R&D team, which is not readily available. To add to this, building a solution in-house takes longer than integrating with an existing solution, and with the increasing number of brands embracing a digital presence, time is a luxury.
Brands are going to be judged in the future based on their response to the crisis today. The primary focus for online banks and fintech apps here should be to maintain brand loyalty.
PassTo, a fintech product by Blabla Connect, has won customer empathy by waiving off all transaction fees during the coronavirus outbreak for its users. Here is a screenshot of PassTo’s in-app message that conveys the same to its users:
How traditional banks respond to their customers is pivotal to how their brand is perceived for years to come, and as with other industries, content plays a key role here.
The average open rate during COVID for financial institutes is 25.8%. Digital consumers today are receptive to a greater frequency of communication from their financial institution when it is delivered via email. Apart from transactional communication, emails can include awareness content such as articles and videos. Links to online FAQs around currency exchange rates, service fees, and sending time frames can be included in these emails as well – anything that adds value to your customer during these times.