It’s hard to believe that we’re approaching the end of 2021. It’s been nearly two years since COVID-19 began reshaping the fabric of our daily lives, and we’ve been making adjustments ever since. For most of us, adapting to a post-pandemic reality has meant relying more on digital services for things like grocery and retail shopping, food delivery, and online banking.
Did you know that the pandemic accelerated the adoption of digital banking products and/or services by six years? One of the most significant adjustments financial institutions are facing today is learning to keep pace with soaring demand for digital self-service payments options.
In this blog post, I’d like to share some data SWBC has observed in the course of delivering our services
to financial institutions throughout the pandemic that has influenced our understanding of consumers’ preferences when it comes to payments.
Consumers Adapted to COVID-19 Disruptions By Going Digital
We've seen some interesting activity across the last 21 months in our work with over 800 financial institutions that leverage our technologies to process transactions for loan payments and transfers into checking and savings accounts and new account funding.
I’ll summarize our observations into two categories: live agent, which are your team members or partners who are originating payments while speaking to an account holder for services or collection inquiries; and self-service, which are account holders who themselves are utilizing either mobile or desktop apps or browsers to enter and schedule their own transactions.
At the start of the U.S. shutdowns, we initially saw a substantial surge in live agent call activity. In fact, we saw the quarter-over-quarter growth rate for live agent activity in Q2 2020 outpace the quarter-over-quarter self-service growth rate by four times!
This was a large surge in an unprecedented amount of work going into call centers of our financial institution clients. Interestingly, though, in Q3 2020, those growth rates flipped and self-service growth rates accelerated aggressively. We saw a slight contraction in the live agent activity and a substantial acceleration in self-service activity.
So, what does this all mean? Consumers were initially performing these transactions in the branches. As branches shut down, they had to initially change their behavior by calling live agents to help them perform these actions. However, after realizing that the branches weren't opening any time soon and learning they could do this work online, we saw that many consumers then adjusted to their next preference, which was moving to do this work through their mobile devices online.
Since Q3 2020, the quarter-over-quarter growth rate of self-service has continued to grow at accelerated rates while the live agent activity continues to decline and get back to a normal plateau for self-service transactions.
What Increased Demand for Self-Service Payments Means for Financial Institutions in 2022
We anticipate the need for increased self-service payments functionality to persist for the next 12 months, at least. We also expect that much of the activity we saw initially move away from branches and live-agent calls will remain digital. Many branches have resumed somewhat normal operations. Although the facilities are now open, digital payments transactions have continued to grow in the self-service space.
Between our direct observations of millions of consumers performing transactions with hundreds of financial institutions across the U.S., the daily strategic conversations we're having with our clients, and our secondary market research in other digital services, it's clear that financial institutions need to become intimately familiar with how to optimize digital payments channels for their account holders. It should officially be part of the new normal.
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