Will Online Banking Become Dominant After the COVID-19 Pandemic?

Given the financial impact of coronavirus, will the online banking industry remain as is or will online banking become dominant after the pandemic?

The coronavirus pandemic of 2020 has already changed the world irrevocably, and its impact will only continue to grow. There is no avoiding a global recession and this one would be unlike any other in human history. However, not all changes that will come out of this are bad. The rise of online banking triggered by worldwide lockdown policies is definitely one of the good changes.

The Rise of Online Banking: Before and After COVID-19

The rise of online banking has started several years prior. This type of service has won over people due to its convenience as well as lower fees and additional benefits. In the world that’s getting more digital by the day, a digital banking service is an essential element of the global change.

However, while the online banking revolution has been going strong, it lacked the driving force to truly challenge traditional banking. The COVID-19 pandemic has brought that final push that now gives online banks a real change to replace brick-and-mortar financial organizations of the past.

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The number of people registering accounts with various digital banks has increased exponentially since the start of the pandemic. This trend is most prominent in Asia, but similar changes are happening all over the world.

That’s not a surprise because the banking industry is also affected by lockdowns. In many countries, switching to digital payments is a state-mandated requirement. Therefore, even people who didn’t want to use digital banking services before, have no choice but to change their ways now.

The COVID-19 pandemic has changed the way consumers behave in many ways. The switch to digital services is one of the most important among these changes. Moreover, it’s the one that is most likely to stay in place even after the world goes back to normal.

This means that the pandemic is that last push that the digital revolution needed to get to the next level. All things considered, this change might spell the upcoming end of brick-and-mortar banking as a whole.

Who Benefits from Lockdowns the Most?

Enforced state-wide lockdowns that confine billions of people to their homes are the main cause of the pandemic’s devastating economic repercussions. According to the IMF, these lockdowns are responsible for what’s sure to be the worst recession since the Great Depression.

However, even in these times of strife, some businesses are growing. Online banking and other fintech solutions are among the main benefactors.

Top service providers that got a sudden influx of customers include:

  • Money transfer companies. Smaller money transfer companies are struggling at the moment because they are mostly reliant on small businesses for cash flow. However, major players in the industry, the ones that regularly get the best foreign exchange service awards, are doing quite good. These services are used by everyone who needs to make international transfers and also wants to avoid forex volatility. The current economic situation creates many great opportunities for forex traders and people who need to send payments abroad regularly. Top money transfer companies do not only offer lower fees and currency exchange margins compared to traditional banks. They also offer hedging tools that help their customers get some security in the currently volatile FX market. Also, they are fully digital, so you can use them easily without any risk to your health.
  • Online brokers. The great coronavirus stock market crash was bad. But that particular market is recovering very fast now. In fact, many people are choosing to invest in stock nowadays. The crisis showed them how important it is to have assets and passive income to fall back on if you are literally cut off from your job. The stock market is volatile, as is everything else due to the recession. However, fintech solutions are a definite good investment in the current conditions.
  • Online tax preparation services. A pandemic is no excuse from taxes. However, people are heavily restricted in their ability to actually handle all the necessary paperwork on their own. Digital tax preparation and payment solutions are on the rise similar to online banks.

These services are only the top few of the many fintech solutions that are rapidly gaining popularity now. There are apps for all types of payments either released already or in development. This new step in the fintech revolution is changing not only the ways in which consumers can make payments. It also pushes various organizations to evolve their payment methods. After all, in some places not being able to accept digital payments now means that you cannot accept any payments at all.

The Future of Fintech Solutions in the Post-Coronavirus World

At the moment, the future of fintech looks brighter than ever. The rise in the use of apps is a trend that will definitely continue. The coronavirus pandemic has exposed the need for more efficient types of payments. Therefore, it’s only natural that those will continue to develop and steadily replace outdated methods.

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Brian Meiggs
Brian Meiggs
Brian is the chief editor of Finance Write and is a personal finance expert who has spent the last few years writing about how Millennials can make smarter money moves. He has been quoted in several online publications, including Yahoo! Finance, NASDAQ, MSN Money, AOL, Discover Bank, GOBankingRates, Student Loan Hero, Fit Small Business, Cheapism, SmartAsset, Bankrate, RISE Credit, AllBusiness, Cheddar, Commonbond, Niche, Rewire, Credit Donkey, Debt.com, and more. He uses the free Personal Capital app to manage his cash flow and net worth.