How will we look back on 2020? For many it was the year of lockdowns, life shifting online and unimaginable disruption. We’ve seen economies
changed our financial habits
Which trends has COVID-19 triggered
or accelerated and how will banking evolve
in the future?
How will we look back on 2020? For many it was the year of lockdowns, life shifting online and unimaginable disruption. We’ve seen economies
around the world brought to a virtual standstill and are still navigating a global health crisis that has left very few nations unscathed.
Against this tumultuous backdrop, we set out to uncover how people are adapting so that we can better serve their needs in the future. We asked over 36,000 individuals from 12 diverse markets in our footprint how they’ve changed the way they earn, spend and manage money in the wake of COVID-19.
We’ve found that, despite uncertainty and financial hardship, there is optimism and resilience. Confidence is strong across markets and people believe we can overcome the challenges brought on by the pandemic – and adapt and thrive – if armed with the right tools and technology.
The pandemic has sped up changes that might otherwise have taken years. Many people are now enthusiastically embracing new digital ways of managing their money, finding a greater ease and convenience in doing so.
Spearheading this adoption is a generation of younger consumers, who are emerging from the crisis more mindful of their finances, while enthusiastically adopting new ways to generate income and manage their money. They may be among the hardest hit financially, but they are confident in their digital skills and ability to prosper in the future.
This report explores the trends triggered, or hastened, by COVID-19, and looks at how banking may evolve from this point onwards.
Many of the trends highlighted in this report were bound to materialise at some point, but COVID-19 has drastically accelerated them, spurring on the integration of digital into our lives. Despite the all-encompassing challenges that have unfolded in its wake, the pandemic has also presented an opportunity to build a digital financial world that is inclusive, allowing better and faster access to banking.
Banks and fintechs have an important role to play in seizing this opportunity. As a global financial services provider, this research is invaluable to us. Understanding our customers’ evolved needs will help us serve them better and, ultimately, support them in realising their goals, whatever the headwinds.
Ben Hung, CEO, Retail Banking and Wealth Management
Our survey of 36,000 consumers in 12
markets investigated the impact of COVID-19 on people’s finances and aspirations.
Our survey of 36,000 consumers in 12 markets, conducted between July and October
2020, investigated the impact of COVID-19 on people’s finances and aspirations, as well
as the pace at which they are adopting digital technology. This report, Future Money, explores the implications of our survey for financial
services in the future.
How will financial services evolve?
A new generation searches for new solutions
The financial needs of young consumers are changing, making them more willing to experiment with innovative banking technology. The majority (79 per cent) of people aged 18-34, particularly in fast-growth markets, see the pandemic as an opportunity to work harder and get ahead in their career. These customers are seeking out diverse income streams and ways to invest. They are confident they have the digital skills to thrive in a post-COVID-19 world and are beginning to experiment with digital financial services and tools. These trends point to the rise of digital solutions such as agile investing, automated switching services for banking and more nomadic banking services.
The shift from physical to digital banking is picking
A branchless and cashless banking world may come earlier than expected as the adoption of digital products and services accelerates.
COVID-19 has prompted more people to bank on their mobile phone, laptop or tablet, with a corresponding drop in in-branch banking – and consumers expect this trend to continue. We are also seeing a faster transition to cashless societies: two thirds of consumers around the world (64 per cent) think their market will stop using cash altogether, predicting on average that this will happen by 2030.
The accelerated switch to digital could trigger a faster expansion of super apps, more experimental banking services and a greater focus on biometric security.
Our approach to spending and managing money
is becoming more mindful
While online shopping is growing rapidly, hyper-local, ethical spending is on the rise, and consumers are taking a more careful approach to spending. COVID-19 has made consumers more aware of what and how they buy. Despite a marked shift towards e-commerce – with almost half (48 per cent) of people saying they now prefer to buy online – many say they are more interested than ever in buying goods produced locally and sustainably and spending their money with small businesses.
What are consumers telling us?
The local view
Fast-growing markets are more confident in their outlook, with a greater appetite for experimentation with new ways of earning and more mindful ways of spending.
Respondents in Kenya (89 per cent), India (89 per cent) and UAE (87 per cent) are the most confident in their ability to thrive in a more digital post-COVID-19 world.
Kenyan (85 per cent), Indonesian (80 per cent) and Pakistani (66 per cent) respondents are the most likely to consider starting a new business to diversify their incomes.
Respondents in Kenya (93 per cent), India (90 per cent) and the UAE (89 per cent) are the most careful with their spending and Indonesians, Kenyans and Indians are most likely to be buying more products from small, local and sustainable businesses as a result of COVID-19.
HOW WILL FINANCIAL SERVICES EVOLVE?
We take a look at the consumer trends driving innovations that will transform the way people earn, spend and manage their money.
TREND 1: A new generation searches for new solutions
COVID-19 has brought about the emergence of a new generation of banking customer with more complex financial needs. These customers are seeking out more diverse income streams and new ways to invest. They are also more willing to experiment with new digital financial services and tools.
The financial needs of young consumers are
The pandemic has spurred consumers, especially younger people, to seek out new sources of income and home in on their long-term financial goals. The respondents in our survey are highly driven – 79 per cent of them say they would rather work harder to get ahead in their career than work fewer hours in return for less pay. This is even more pronounced for those aged 18-34 where 86 per cent would rather work harder. Younger consumers are open and eager to diversify their income streams – for example, by setting up a new business or launching a ‘side hustle’ to supplement income from other sources. Their digital skills also make them more confident in their financial futures.
In the next three to six months:
Consumers are now much more willing to experiment with innovative banking technology
Since the start of the pandemic in early 2020, consumers across the world have been embracing innovative banking technology more than ever before, and young people are more experimental than any other generation. On average, 29 per cent of 18 to 34-year-olds have started using new digital money management tools during the pandemic (compared to 19 per cent of those over 45) – including setting up digital-only banking services, using mobile wallet payments or opening a wholly digital bank account.
Compared to before the pandemic, how has your use of online banking via your mobile device changed?
- I am using it more
- I am using it less
- I haven’t noticed any change
Agile investing – Investment and savings apps will transform to become on-demand services. Retail investors and savers will be able to scan a QR code or tap on their phones, as if they were purchasing a product, to be able to invest in a business or a product of their choice.
Automated switching services for banking – Intermediaries will become popular with consumers, enabling them to transfer their banking services automatically between suppliers towards the best deal, hassle free.
Digital nomad banking – New digital entrepreneurs will emerge, starting their own businesses and side hustles. These customers will expect their banking services to actively support this, allowing them to move fluidly across different geographies, and more dedicated ‘nomadic’ banking services will evolve.
TREND 2: The shift from physical to digital banking is picking up pace
COVID-19 has accelerated the transition away from physical branches and cash, fuelling the growth of innovative digital banking services. This has put the long-anticipated future of a branchless and cashless society on fast-track.
A branchless banking world is coming earlier
Over 50 per cent of our survey respondents globally have made more use of digital banking on their mobile, tablet or laptop in the past few months. COVID-19 has accelerated adoption of basic digital banking services, and this trend is not temporary. Consumers are increasingly using digital tools to manage their finances – embracing automation and digitisation, including online-only bank accounts and money management/budgeting apps. In the future they will interact less with physical branches or use them in new ways.
Beyond paper: a cashless society by 2030
A surge in online purchases and working-from-home arrangements during COVID-19 has accelerated the transition away from cash faster than expected before the pandemic.
A majority of respondents in each of the markets we surveyed (except for Pakistan) believe that their market will go cashless in the future – amounting to 64 per cent globally. On average, people predict that this will happen by 2030.
The rise of super apps – Increased use of multi-purpose, multi-faceted super apps will spread from early-adopter markets in Asia, to the rest of the world. Users will increasingly be able to consolidate all their mobile activities into a functional one-stop-shop that fulfils not only their banking needs but many other payments and lifestyle services.
Investment in experience – In lieu of branches being used to manage everyday finances, interactions between banks and customers will evolve in new physical and virtual spaces. Branches will shift from being a place for everyday financial transactions to places of rich experience, such as learning in an interactive classroom or relaxing in a coffee shop.
Biometric security becomes more important –
The rise of secure banking via fingerprints and face/iris scans will reach a tipping point where biometric security overtakes traditional security mechanisms such as PINs to become the go-to method for people to protect their money.
When do you think your country will go cashless?
TREND 3: Our approach to spending and managing money is becoming more mindful
People around the world are changing how they spend their money and what they spend it on. The pandemic has accelerated the shift to online shopping, but this is not the only change – people have become more cautious about their purchasing decisions, and more mindful about what they buy, with increased preference for locally-made, sustainable products from small businesses.
The digital high street: online shopping is growing rapidly, while hyper-local, ethical spending is on the rise
Almost half of our respondents (48 per cent) say they are likely to prefer to buy online in the future. While there has been an unprecedented increase in the proportion of online shopping, over 50 per cent of people globally say that COVID-19 has made them more inclined to shop with smaller, local retailers, and to buy more sustainably sourced products. At the intersection of these dynamics, we can expect to see people doing more of their online shopping with small-scale, independent and sustainable businesses.
Consumers are becoming more cautious and resolved to manage their money better
The pandemic has prompted consumers across the globe to take stock of their finances and to educate themselves to improve the way they currently manage their money. People of every age and geography – but particularly younger people – have responded to greater pressure on their finances by tightening their grip on their spending and turning to new tools to manage their money.
Impact investing will flourish – Long-term savings accounts (such as retirement accounts) and other investing practices will become more flexible and go beyond the environmental, social and governance (ESG) retail investments currently on offer. These new services will give customers the opportunity to back specific causes with their investments.
The emergence of more local and sustainable online businesses – Businesses will respond to consumer appetite for more ethical online products and services by adapting their business practices and products to meet new expectations. Businesses will also invest more in their online presence to entice increasingly digital savvy consumers.
Ethical data collection – As consumers increase their attention to their spending, banks will facilitate this by collecting more data and sharing it with other apps as necessary. The ethical use of such data to protect consumers' privacy will be increasingly brought to the fore for users and financial services.
Has COVID-19 made you more or less mindful of what you are buying and from whom?
- More mindful
- Less mindful
- No difference
WHAT ARE CONSUMERS
How COVID-19 is changing the way consumers earn, spend and manage their money (save and transact).
Globally, people are responding to the crisis by working harder, more flexibly and thinking of new ways to increase their earnings. More than half of our respondents believe their work or income will change as a result of the pandemic. Across generations and markets, people are considering changing the way they work, seeking out new
New ways of earning being led by young people
Are you considering retraining/learning a new skill to increase your earnings in the next three to six months?
COVID-19 has encouraged consumers to shop online more but has also prompted consumers to shop more carefully and consciously. Consumers, particularly young people, have started tracking their spending and are also more inclined to buy from local, small and sustainable businesses. Despite this increased caution, online shopping has boomed as people transition away from in-person payments.
People’s preference to buy things online
Shopping habits revolutionised by COVID-19
How are you tracking your spending?
- Pen and paper
- Online budgeting tool
- Banking mobile app
- Not tracking
SAVE AND TRANSACT
COVID-19 has been a catalyst for many to begin exploring new digital tools to track their spending and manage their money. The crisis has ushered in more experimentation with new financial tools and services. Over 50 per cent of our respondents say they are now banking more on their mobile phone, laptop or tablet, and more people are looking to manage their money in new ways with mobile apps. Our research has uncovered that younger generations, in particular, are facing their financial futures head on. They are taking action and reviewing their budgets, savings plans and debts to improve their chances of achieving their financial goals.
New financial habits embraced by those aged 18-34 to achieve their goals
If you were given £1,000 by the government tomorrow, how would you spend it?
- Pay off existing debts/daily expenses
- Keep the cash in my bank account
- Invest in the future
- Buy something nice for myself
The pandemic has affected economies around the world, but people are reacting differently when it comes to their financial habits.
A more confident outlook and a greater appetite for diversifying income streams
Around the world, people prefer to work harder to get ahead in their career rather than working fewer hours for less pay (79 per cent). This is particularly the case in Kenya (93 per cent), Mainland China (90 per cent), and India (88 per cent). People in fast-growing markets are the most likely to consider diversifying their incomes to increase their earnings. For example, Kenya (85 per cent), Indonesia (80 per cent) and Pakistan (66 per cent) see the highest levels of interest in starting a new business.
People across markets are mostly confident in their ability to thrive based on their digital skills
Rapid acceleration from physical
The majority of people think that their market will go cashless – but this varies – with 87 per cent in India and 39 per cent in Pakistan agreeing that their market will go cashless.
Expectations of when countries will go cashless also varies by market. Most respondents in India and Indonesia think their markets will go cashless by 2025, whereas the majority of US respondents don't expect a cashless society until 2100.
A more mindful approach to spending
75 per cent of people globally say COVID-19 has made them more careful with spending – with Kenya (93 per cent), India (90 per cent) and the UAE (89 per cent) leading the way.
Fast-growing markets, including Indonesia, Kenya and India are the most likely to buy from small and local businesses and choosing sustainably sourced products, as a result of COVID-19.
HONG KONG: careful spenders
In Hong Kong, people appear to have responded to the economic implications of COVID-19 with a focus on their spending. By being more careful and tracking their spending, they are more able to keep their finances in check. Hong Kong has seen the largest decreases in spending on groceries and experiences during the pandemic, and over 20 per cent of our Hong Kong respondents expect to spend less on groceries and experiences in the future.
Hong Kong respondents have seen the largest decreases in spending on groceries (22 per cent) and experiences compared to before the pandemic (49 per cent).
INDIA: facing a post-COVID-19 future with confidence
Respondents in India are the most optimistic and assured of all the people we surveyed. They have the highest level of confidence in their digital skills to thrive post-COVID and have grown more confident in their ability to achieve their financial goals since the onset of the pandemic. India also has the highest proportion of people thinking their economy will go cashless.
India is the top market for the following findings:
INDONESIA: rapidly digitising and diversifying income streams
A large majority of Indonesians have been driven to work harder and diversify their sources of income as a result of the pandemic: they are the second most likely across all markets to consider setting up a additional income stream, re-skill or start their own business, and joint third most likely to want to make more use of technology in the way they work.
KENYA: responding to COVID’s financial challenges with care
Respondents in Kenya are more likely than people in any other market to consider diversifying their sources of income, such as starting a second income stream, reskilling or starting their own business. In our global survey, Kenyan consumers are the most likely to be careful with their spending (93 per cent), and the most motivated to improve their money-management skills. They were also the top market in the following findings:
SINGAPORE: staying ahead of the curve
Singapore was one of the most tech-savvy markets we surveyed, with two-thirds of Singaporeans (67 per cent) already using a mobile banking app before COVID-19 hit, but this trend has been accelerated by the pandemic. Singaporeans are also much more positive about e-commerce and expect to increase their online shopping in the future. A majority think Singapore will go cashless and their average prediction is by 2031.
UAE: transforming the world
Of all the markets we surveyed about the impact of the pandemic, respondents from the UAE have seen their way of working changed the most. People in the UAE have significant appetite to integrate technology more in the way they work. A majority are considering diversifying their income sources post-COVID-19, and many are interested in doing voluntary work for charities.
A 10-minute online survey was conducted in three waves by Portland Communications.
We surveyed 1,000 adults (18+) online per market in each wave. We targeted a nationally representative sample by age, gender and macro-region in 12 markets: Hong Kong, India, Indonesia, Kenya, Malaysia, Mainland China, Pakistan, Singapore, Taiwan, UAE, the UK and the US.
Results are weighted on the latest national census (published by the national statistical authority) in each market by age, gender and macro-region and should be considered representative of the online population. Portland Communications is a member of the British Polling Council.
Wave 1: Friday July 3rd to Monday July 6th, 2020
Wave 2: Monday August 17th to Thursday August
Wave 3: Friday September 25th to Thursday October
For further information, or to ask questions, please email: email@example.com
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