How The Pandemic Has Changed Banking Forever

Posted on Friday 09 April 2021

How The Pandemic Has Changed Banking Forever

We’ve all heard the phrase “New Normal” more times than we can count. It’s one of the most dreaded sayings of 2020, but we keep using it for good reason. The impacts of the pandemic are far-reaching, significant, and unavoidable.

Each of us have had to embrace a new semblance of normalcy: since the first few weeks of the pandemic, the way that we live, work, interact, and travel have all experienced huge changes. Even the way we get money. So many people got payday loans in Ontario for example. It's pretty amazing.

Sure, we all know that seeing concerts, gathering in public spaces, and even getting groceries have all gone through their pandemic updates – but what about the ways that we manage our finances?

How has the pandemic forever changed banking as we know it? Let’s take a look at how the global pandemic has shaped personal finances – and how you can best adapt.

Mobile banking is more popular than ever

This one isn’t surprising: with widespread restrictions on social distancing and mask mandates, going to visit your bank in person has felt less than ideal over the past year. Even if you wanted to talk to an investment specialist.

A national push to stay at home and quarantine means adapting to using online and mobile apps to bank instead. Consumers are depositing checks, paying bills, transferring funds, and keeping an eye on their finances from the comfort of their own home.

Of course, mobile banking has always been a popular option for its ease and convenience, but the pandemic has brought mobile banking capabilities to the forefront. And it goes without saying that younger generations (who have almost always had access to mobile banking) will be more apt to use their phone than older generations (who are more accustomed to in-person banking).

Still, in April 2021 alone, banks reported a 200 percent increase in mobile banking sign-ups – which marks a huge shift in how we’re collectively managing our finances. Wonder if they were related to filing taxes? Either way, that's a huge jump.

Cash is no longer king

When the pandemic first began, many thought that COVID-19 could be spread through surface contact. As a result, we were spraying disinfectant on countertops like there was no tomorrow, wiping down groceries, and using more hand sanitizer than ever before. That also meant that we stopped relying on cash.

Businesses and restaurants that could still operate under health guidelines advised against cash use or prohibited it entirely, shifting toward safer, contactless payments via credit card terminals or tap to pay cards. And even if it wasn’t strictly prohibited, it made good sense to opt for credit and debit cards instead. Eliminating cash from your wallet meant decreasing trips to (and contact with) high-risk public places, such as the ATM or the bank counter.

Although we know that COVID-19 is not spread through direct contact with surfaces, cash is still objectively a surface that can collect other unsanitary droplets and germs. (And it’s safe to say that living through a pandemic has opened all of us to at least a little bit of germaphobia.) Combined with the ease of swiping a card instead of carrying cash at all times, the future of banking likely holds a continued preference for plastic payments.

This preference extends beyond in-person transactions, too. Many consumers now find that they are much more open to online shopping instead of going to a store, ordering takeout and delivery, and even managing their grocery purchases online.

Business banking is booming

Business banking saw a surge in popularity during the first few months of the pandemic, with stimulus checks and small business funding becoming widely available. Financial institutions across the country found their business banking services in higher demand than ever, particularly when it comes to small business loans.

As a business owner, having a positive relationship with your bank has never been more crucial – or more rewarding. While some banks accepted and evaluated all loan applications equally, many consumers found that banks prioritized long-standing customers.

Here’s another consideration: historically, small businesses haven’t always had easy access to financial backing. This is true for mom-and-pop shops to independent contractors, the latter of which may not have been able to access small business loans previously.

Whether loans came in the form of forgivable government-sponsored funding or special terms and significantly low interest rates, a renewed focus on supporting entrepreneurs and small business owners is likely to continue even after the pandemic.

Credit card perks are changing

Before the pandemic, some of the most valuable credit card rewards were for travel. From free hotel stays to airline miles to discounted baggage fees, travel rewards could easily fund cross-country and international travel.

However, the pandemic quickly led to closed borders, restricted travel, and meeting via Zoom instead of in-person. Working from home – and staying home as much as possible – quickly became the safest option, with vacations and weekend trips cancelled indefinitely.

Suddenly, all of the perks that came with travel credit cards became obsolete (or, at the very least, they became less appealing). Consumers are now much more interested in credit cards that can help them better manage their monthly balances. Cash back, lower interest rates, and no-interest promotional periods now hold higher value than travel rewards. Even as travel becomes more accessible, this widespread shift is likely to stay.

The face of banking has changed forever, but let’s face it: that’s a good thing. Online banking, a focus on banking relationships, better access to loans, and more rewarding credit card perks are all great trends for consumers. Of course, a widespread shift to a more digital banking world won’t replace our need for human interaction and financial advice – but you might find that phone calls, Zoom calls, email, and online chat all become staples of our New Banking Normal.