The impact of COVID-19 on the use of online banking

According to health recommendations, one of the most effective ways to contain the current COVID-19 epidemic is to avoid personal contact. This means reducing the movement of people and increasing the time they spend at home as much as possible. In line with these indications, most banks in the affected countries have reduced the opening hours of their branches and they recommend their customers use online banking.

To encourage the use of this channel, many banks have taken the opportunity to send out positive messages and to remind their users of the benefits of online banking. These benefits include the ease of carrying out any transaction 24/7 and enjoying permanent access to all financial information in real time. Some banks have also tried to promote online banking by sharing tutorials and expanding the types of transactions customers can carry out remotely.

For users themselves, there are also a number of factors driving the increased use of online banking, such as the fear that cash could spread coronavirus. Analysts say the psychological factor of people thinking of cash as “unclean” could prompt more adoption of payment methods like Apple Pay and Venmo.

Is this a passing trend or a turning point for online banking?

A question that has arisen during the current situation is whether the increase in the use of online banking will be a passing trend while the confinement and social-distancing measures are in place, or whether it will mark a turning point on the market.

Although we still have to wait and see the data on the true increase and if it lasts, there are already some early indicators of the consumer mindset amid the current pandemic:

Source: Lightico (US data, 15 March 2020)

In 2019, an average of 58% of customers in Europe used online banking services. While slightly below the average, with 55%, Spain is above Portugal and Italy, with 42% and 36% respectively. Yet Spain is far from the top-ranked countries of Denmark, the Netherlands and Finland with an average of 91%. We will have to wait for the data from 2020 to see the true impact of the change.

The role of banking in the current situation

However, it is clear that people still require banking services, and even minimal in-branch services, because not all users will immediately transition to digital channels. For example, elderly customers, who are among the most vulnerable to COVID-19, are the least likely to increase their use of online banking. Data on the use of online banking services by age range in Europe shows that among users between 55 and 64 years of age, 48% use online banking, less than half, and among those aged between 65 and 74, the figure is even lower at 33%.

If we look at Spain alone, these figures are lower still: For customers aged 55 to 64, 23.4% use online banking, while the figure is just 23.02% for customers between 65 and 74.

For this segment, messages encouraging the use of online banking will not be enough. These customers will require more resources and support in switching to online banking, as people of this generation are generally less accustomed to using digital channels. Such resources include online tutorials and those with telephone support, as well as increasing the remote support options available to resolve doubts and queries.

In any event, and although the increase in the adoption of online banking services is being driven by the pandemic and the health restrictions in place as a result, it could bring about positive change in the medium and long term. For example, with the improved security and usability of digital channels to facilitate access to banking services for certain user segments. Only time and data will tell.