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More than one-third of consumers have discovered new digital ways to make payments during the Covid-19 pandemic, with many using large tech companies and challenger banks.
According to Capgemini’s World payments report 2020, 38% of people found a new payment provider during the lockdowns. The survey found that 30% of consumers are using large tech companies to make payments and 50% use challenger banks for some payments.
Capgemini reported that global non-cash transactions increased by 14% in volume between 2018 and 2019 with 708.5 billion transactions, the highest growth rate in 10 years.
The report found that internet banking and direct account transfers have been the preferred payment method throughout the health crisis for 68% of consumer survey respondents. Contactless cards were the second most popular payment method, with 64% of people using them often.
Digital wallets, including QR code payments, were the preferred choice of 48% of respondents, and the report predicted that half of the world’s population will be using digital wallets by 2014.
“Covid-19 has accelerated the rate of innovation within the payments space to quickly form the next normal, requiring payments firms to be digital masters almost overnight,” said Anirban Bose, CEO of Capgemini’s financial services. “Now, more than ever, payments providers need to deliver differentiated offerings that emphasise speed, convenience, and a superb end-to-end customer experience.
“Currently, we are seeing visionary banks and payment firms diligently prioritising technology transformation and actively adopting a ‘curate and collaborate’ approach by teaming with agile new players to create more nimble organisations.”
Read more about fintech response to Covid-19
- Banking and financial services trade body UK Finance to increase spending limit for contactless payments to £45 from the start of April.
- Technology startups in London are fighting for their existence, with business plans for the next three months geared towards survival.
- Financial technology professionals have created a tool that will support self-employed people claiming financial relief from the government.
Consumer demand is vital to drive fintech development and the pandemic may have triggered what could be the next phase for the sector.
Fintech entrepreneur Matthias Kroener, who founded an early challenger bank, said there will be a much bigger consumer audience for digital services once the pandemic had passed.
“Due to new ways of working and living during the pandemic, digital living is not a myth any more,” he said. “Even people who had never done a video conference before now know Zoom.”
Kroener added that the pandemic will influence the next round of fintech innovation.
David Bannister, wholesale banking analyst at Aite, said it is not just consumer fintech that is seeing increased take-up. “Absolutely it has accelerated the move to digitisation at banks, particularly in the small business and corporate-type banking side,” he said. “It was happening before, but the numbers show this.”
Capgemini’s report said Covid-19 had driven corporate treasurers, facing business challenges and inefficiencies, to look at digital to address challenges around counter-party risk, connectivity, payments automation and cyber security.
It added that they want their banks and payments providers to offer enhanced application programming interface (API) integration, risk management, and real-time payments and tracking.