Among the fascinating findings in PYMNTS’ ongoing surveys of Main Street SMBs during the pandemic is this: A majority of small businesses that did not apply for government bailouts simply wished to avoid debt. No matter what. Not even COVID-19 could tempt them.
It’s a powerful statement on payments preference.
People crave familiarity in tough times, and what’s more familiar than one’s own loot? Debit has been riding a wave of popularity for years as credit-averse millennials and their cohorts became big spenders, but didn’t want to end up like their overextended parents did in 2008.
The latest PYMNTS Next-Gen Debit Tracker® done in collaboration with PULSE, a Discover company, charts the path of debit innovation as the economy groans to reopening, and details many reasons why debit seems custom-made for this moment in payments history.
Your Money, Your Way
With lockdowns still in effect and even being escalated in some locales, consumers may be champing at the bit to get back to normalcy, but they seem to sense that it’s still far off.
“Consumers who feel unsure about their financial futures may be turning to debit over credit so that they do not incur debt at a time when job insecurity makes them uncertain of their abilities to repay,” the report states. “Shoppers worried about the virus’ ability to linger on physical objects are also reducing their use of paper currency, leading financial institutions (FIs) and FinTechs to help customers spend safely via digital means.”
Dire though the headlines may be, business is being transacted. A lot of the current payments focus is on next-gen debit products and services with seamless functionality. Touchless, too.
“Banks worldwide are advancing their digital services to spare customers and employees from handling cash or visiting physical locations to decrease their likelihood of being exposed to the virus or unwittingly spreading it,” the report states, adding that “digital banking has moved from a convenience to a necessity in many parts of the world, as FIs follow social distancing guidelines to slow the spread of COVID-19 and consumers seek to avoid public spaces.”
Moves to all-digital, online-only banking must be done with empathy and intelligence so as not to inconvenience or alienate customers who don’t wish to go digital. There is a balance, and the good news is that pandemic-induced distance banking has made FIs smarter about it.
“The remote services imposed by the pandemic are creating learning opportunities for FIs and their customers. Banks are enhancing their digital offerings and exploring best practices for helping customers adjust to digital services, and account holders who were used to in-branch services are getting their first tastes of online and digital banking,” the report states.
There’s no such thing as certainty at this moment, so FIs have to analyze, test, learn and iterate now, when customers need immediate answers and assistance. To help with that, next-gen debit products can smooth over some of the rough road to reopening.
“The COVID-19 pandemic has consumers around the world turning to digital devices to access banking services,” the report states.
“The new surge in demand is putting FIs’ online and mobile offerings to the test and allowing FIs to show off their digital investments and know-how to assure customers that they are in good hands. Banks must now consider how to best expand remote services and emphasize these channels once consumers can safely visit branches again,” per the report.