As Covid-19 has put high-street retailers on stand-still and Ecommerce businesses see a ‘boom’ period in the last year; it seems as if consumers have also adapted accordingly and experienced the convenience of digital payments.
New technology has allowed consumers to manage their finances through online banking apps, whilst providing various alternatives in digital payments; allowing an easier management of finances.
Recent research that was carried out by ThoughtWorks, surveying consumers in the UK, revealed that a large amount of adults are making use of online banking to manage their money. Although banks are still doing their best to operate as normal, consumers may feel the method of online banking is a more safer option.
Findings from ThoughtWorks highlighted this, as 39% of consumers reported that they haven't been into a branch since COVID-19 began. Mobile use is at an all-time right now and that has persuaded 33% of those surveyed to try online banking for the first time.
Due to the downtime as a result of restrictions, this was seen as the perfect opportunity for consumers to organise their finances. 18% of consumers said that they’d used downtime during lockdown to give their finances an overhaul, while building up savings and avoiding non-essential purchases.
Although online banking may be normal for millennials, the older generation are now beginning to see the benefits of online banking. 15% of over 55s are now moving away from cash and towards online activity. This could again be due to them feeling this is a safer way of managing finances, so they’re not exposed to COVID-19.
Are the days of traditional cash payments disappearing?
We are seeing a trend of digital payments being the preferred method of payment as a result of COVID-19; but will this be long-term?
Research revealed that the under 25 age group are leading this change, with 25% now using online banking. 36% of consumers have opened a PayPal account, while 13% confirmed to using Apple Pay to purchase goods. Internet banks such as Monzo and Plum have been popular destinations for those looking to open up accounts; as 14% have opened up an account.
Ecommerce sites such as eBay, have accepted PayPal payments for some time now and that seems to be encouraging consumers to realise there is indeed another method of payment when purchasing products or transferring money. Findings from ThoughtWorks also revealed:
31% saying that they no longer carry money in their purse or wallet
28% of consumers are now avoiding cashpoints
24% of consumers state that they’ve stopped writing paper cheques altogether
16% have cashed a cheque using a finance app
It is being predicted that 2020 could have been the year when cash is no longer considered an option by many. This could pose concerns for shops that accept cash-only; will market stalls have to adapt accordingly?
Phil Hingley, Director of Financial Services at ThoughtWorks UK said: “For long periods of 2020, households have adapted to confinement and technology has been a vital tool that has helped people to keep life going and stay connected with work and loved ones. In this context, with high streets empty and banks closed, many people discovered new ways to manage money and make payments online,"
"With hindsight, 2020 could well be the year when cash died. Changes in consumer habits also raise urgent questions for high street banks, as technology and more agile customer interaction have moved consumers away from a reliance on the high street. The question for banks in 2021 is how they will adapt. We believe banks still have a crucial role to play but the days of them just safeguarding cash and issuing cheque books are well and truly over.”