Global modern card issuing platform provider, Marqeta, predicts that the current COVID-19 crisis could create a ripple effect that will change the face of banking forever. With many branches closing or moving to restricted hours, an increasing number of the older generation – many of whom have not used them before – are now turning to digital banking and payment solutions to avoid leaving the house. Marqeta believes this shift could represent a tipping point that alters our relationship with cash forever, ushering in a new age of digital banking that crosses generations.
“The contactless limit has been raised to £45,and more and more retailers have moved to card only while cash usage has halved, according to ATM operator, Link,” comments Ian Johnson, Managing Director Europe for Marqeta. “This indicates that we are seeing a significant change in behaviour in the wake of the current crisis. Banks will need to be ready to manage the move away from cash, and ensure their infrastructure can cope with the rise in mobile, contactless and card payments.”
Beyond increased uptake in well-established payment and banking technologies, such as banking apps and contactless cards, the crisis is also driving adoption of newer types of digital banking services. FinTech app usage is exploding, as consumers look for greater control and flexibility from their banking providers. Marqeta warns that this trend could create significant challenges to traditional banks, who are unable to move at the speed of their digital counterparts.
“Over time, this global event could trigger a swing in the balance of power between digital and traditional banks. Historically, digital banks have struggled to encourage users to fully migrate to their platforms; many still use a traditional operator as their ‘main’ bank, while using their digital bank for very specific activities,” Johnson continues. “Yet assuming digital banks prove themselves stable and reliable through the current crisis, this could all change. Digital banks are far more nimble and agile when it comes to responding to upheaval. Given the unprecedented disruption taking place right now, this ability to adapt will be invaluable.”
In response to these challenges, many traditional banks will need to partner with FinTechs to fill the void, as Johnson concludes, “The COVID-19 pandemic will expose some of the gaps in traditional banks’ digital infrastructure – gaps which they may have previously been able to paper over, but no longer can. This will force many to accelerate their modernisation plans, while strengthening ties with FinTech providers, to allow them to meet this new demand for digital services.”