How Banks Can Embrace the “Next Normal” in Payments and Digital Experiences

By Deborah Matthews Phillips

Deborah PhilipsThe COVID-19 has clearly transformed customer expectations: almost three-quarters of consumers believe increased reliance on digital channels will continue as new behaviors become habits.

With the pandemic representing a turning point in payments, community banks must take steps now to embrace digital channels without sacrificing the personal support customers expect from their community bank relationship.

Trend #1: Contactless Payments Are Here to Stay

Consumer concern about the cleanliness of cash elevated contactless payments as a preferred option for making purchases while expediting the checkout process. Visa and Mastercard reported a 40 percent jump in contactless payments in the first quarter of 2020. In Mastercard’s new survey, almost half said they switched out their top-of-wallet card for one that offers contactless capability.

How to Adapt: Community banks should evaluate their offerings to ensure their credit and debit card products meet the needs of their customers.

In addition to the compelling benefits and perceived safety of contactless, data shows that consumers rank rewards as the most attractive feature a card can offer. Consumers also want cards that provide digital alerts, card controls, and compatibility with digital wallets.

Attract new customers with immediate virtual card issuance. Ensuring your cards provide a robust array of features will help your bank achieve top-of-wallet placement with contactless payment providers and card-on-file accounts.

Trend #2: Virtual Support Offers Alternatives to In-Branch Services

Social distancing and stay-at-home guidelines brought in-person visits to a crawl at the height of the pandemic, with more than eight out of 10 consumers expressing concern about visiting their local branch.

These risk dynamics led 45 percent of bank customers to say in April that they have changed the way they interact with their banks. Additionally, digital adoption is expanding across all generations, as FIS saw a twofold surge in first-time users of mobile banking apps by its clients.

How to Adapt: Community bank ingenuity during the pandemic sparked banking options that allow alternatives to a trip inside the branch. Banks are bridging the gap with personal support delivered through digital channels, such as drive-through ATMs, interactive teller machines, mobile chat features and video banking services.

The next step is scrutinizing the customer journey and rethinking many operational aspects to offer virtual alternatives. With more than 80 percent of consumers expecting brands to find ways to maximize digital interactions, community banks should prioritize digital solutions to loan origination, account opening, deposits and customer support while reviewing customer authentication processes to ensure regulatory compliance and suitability for the virtual environment.

Trend #3: Increased Reliance on Digital Commerce

Already-booming digital commerce has provided a lifeline to goods and services amid social distancing, with U.S. card-not-present payments rising 18 percent in April. Consumers across all generations are becoming habituated to the convenience and comfort of mobile shopping, including for major purchases. Even before the COVID-19 pandemic, nine out of 10 mobile banking users preferred using apps over entering a branch.

How to Adapt: Community banks should continue to enhance their mobile banking platforms and digital payment offerings. Real-time account information, faster payments options and other customer-centric solutions will help community banks remain the one-stop resource for customers’ banking and payments needs.

While community banks stand out for their personal service and deeply rooted connections to their communities, investments in digital technologies increase customer satisfaction and can drive revenue growth. To continue to meet customer expectations now and in the future, community banks must rise to the challenge of preserving those differentiators in a digital world.

Deborah Matthews Phillips is ICBA senior vice president of payments and technology policy and ICBA Bancard senior vice president of industry relations.