Table of Contents
- Increased Demand for Online Services Will Benefit Existing and Emerging Virtual Banks
The Coronavirus pandemic is placing unprecedented stress on the global economy. Service industries in particular suffer greatly when customers and employees are unable to meet and interact in traditional ways. The banking industry has been expanding online services in recent years, allowing customers to manage almost all of their routine banking needs from computers and mobile devices. In this article, Rory Brown looks at some of the signs and trends that indicate ways in which the Coronavirus pandemic could increase the prevalence of virtual banking across the financial industry.
Operational Changes During the Coronavirus Crisis Are Likely to Affect Customer Preferences
During the early phases of the Coronavirus pandemic, banks quickly moved to modify brick and mortar branch operations. Many banks closed 50% or more of their branches and reduced hours and staffing in other branches. Additional steps were taken to reduce the number of customers inside branches at any given time to maintain sufficient distancing between customers and staff. Hours were shortened and special times for at-risk customer groups were established in many branches.
As the availability of in-person services was necessarily reduced and as customers adjusted their behaviors to reduce possible Coronavirus exposure, many customers shifted their preferences towards online banking services. Among the many long-term changes in customer behavior, the demand for online services whenever possible is likely to become a permanent trend.
Increased Demand for Online Services Will Benefit Existing and Emerging Virtual Banks
Positioned to Provide High-Quality Service
Online banking services present additional technological and security challenges above and different from those found in traditional in-person banking. During any crisis, fraudulent actors and cyber threats increase, and the Coronavirus pandemic is no exception. Virtual banks have been focused on these enhanced security needs for years. As banks, customers, and regulators all look for resilient systems to protect against identity theft and all forms of online fraud, existing virtual bank systems and controls will lead the industry in providing adequate security systems. Because virtual banks have been developing these security measures for years, they will be in a strong position to absorb the increased demand for security resulting from the Coronavirus crisis.
Increased and Enhanced Virtual Banking Services Will Attract Customers Wary of Returning to Traditional In-Person Banking
Virtual banking has been focused on replacing traditional banking services with a more convenient and efficient service interface before the Coronavirus pandemic occurred. The long-term changes that will result because of customer preferences and disaster preparation are likely to prompt many virtual banks to expand the services that can be provided remotely. At a time when customers suddenly face unexpected difficulty in meeting in person for lending and mortgage services, virtual banks will be able to take advantage of preexisting and natural advantages they enjoy through their inherent design. Customers already expect virtual banks to be prepared to handle business remotely and professionally and will be more adaptable to the additional remote services that virtual banks might be able to offer.
Among all of the uncertainty about the ultimate outcome of the Coronavirus pandemic, it is certain that the banking industry will look and operate significantly differently than before the pandemic. Virtual banking is well suited to grow and adapt to these foundational changes in market conditions.
About Rory Brown
Mr. Rory Brown has focused on financial technology and investment management for 30+ years. Rory Brown Co-Founded one of the world’s first Internet Banks and writes extensively about the industry.