As a result of our collective response to COVID, social distancing guidelines and in-person limitations have changed consumer behaviors, both globally and nationally. While it doesn’t seem to work as usual, bills, payrolls, and loan obligations still need to be met – despite market turmoil and historic unemployment. Now more than ever, consumers need funds, whether it’s immediate access to their own savings or more instant access to personal loan disbursements.
Twenty years ago the ability to have instant access to our funds really meant going to a bank and doing a transaction over the counter or using the ATM. As digital platforms and devices continued to evolve, so did consumer behaviors. The digital world we currently thrive in has caused consumers to become accustomed to the instant nature of real-time on-demand services. In a world of instant gratification, instant funding is not only possible, it is preferred, and rather very achievable today.
This shift in human behavior and the way business is conducted today supports the idea that financial institutions must continue to meet consumer expectations, or they risk being left behind.
As we begin to assess ‘the sequel’ it is evident that the financial sector cannot wait for the new normal to arrive – it is here. Financial providers should begin to reassess consumer behaviors during the pandemic, identify key pain points, and develop a strategy to adequately meet consumer expectations and demands in the future, including rapid addiction and the need for ‘access and control of digital accounts as well as on-the-go access to funds. By charting a course through recovery efforts, financial institutions will be able to transform better customer service and capabilities into stronger and lasting brand affinity.
While major banks and financial service providers have been able to meet increased consumer demand to digitize, it has been quite difficult for credit unions and independent providers. The traditional barriers (resources, time and budget) that once hindered delivering smooth consumer experiences are now seen as things that can be overcome with the right process, the right network, and commitment.
Consumer Pain Points During COVID
Since March, COVID-19 has turned our lives upside down in an instant. As of June 1, more than 40 million Americans have filed for unemployment, and millions of businesses are scrambling to pay their pay, pay their rent and stay afloat.
The federal government’s stimulus program launched in mid-April remains a topical issue and discussions on the sustainability of the program are still ongoing; millions of businesses have applied for PPP loans, flooding financial providers with loan applications in hopes of speeding up document processing and distributing funds as soon as possible.
According to a recent survey by MasterCard Contactless Consumer Survey “More than half (51%) of American consumers say they have used cash less often or not at all since the start of the pandemic,” indicating a change in consumer behavior regarding spending methods. While physical onsite access has been restricted, digital lobbies have opened the door to greater access on a large scale – on consumer terms, on the go, or in isolation.
There has never been a more critical time for consumers and businesses to access the funds and on-demand services they so desperately need. For convenience, financial providers should consider offering a full range of on-demand instant financing options.
Below, we’ve compiled four key benefits that instant finance offers:
- Driving comfort: Gone are the days when customers or businesses had to write checks or submit ACH transactions and wait for funds to clear. Consumers live on their mobile devices, and consumer behaviors over the past few months have proven that mobile functionality is easy, doable, and here to stay. Financial providers should capitalize on this opportunity and use a 24/7 funding network. This form of accessibility will allow consumers to access their accounts and request and receive funds while on the move or in remote locations.
- It’s time to be aggressive: Waiting for a check to clear can be a long process, and sometimes it can take days or weeks. Push payments allow funds to be accessed in a consumer’s account within minutes. Similar concept to how a bank will withdraw a consumer’s bank account for a debit, except in reverse. The Visa Direct and MasterCard networks offer push payment processing capabilities allowing online lenders to approve the delivery of funds to a prepaid card or debit card issued by a consumer’s bank on the same day.
- Digital loan origination options: Financial institutions have mainly relied on legacy systems, including paper-based processes that were established decades ago. Providing a large-scale digital alternative to paper-based applications enables consumers to bypass slow processing times and delayed disbursements, saving consumers and suppliers time. In short, the faster the application process, the faster the availability of funds.
- The power of technology and data: Computers have proven to be a great asset for storing files, and now they can read them as well. Rather than submitting documents and having to manually approve funding, technology can get the job done in real time. The speed of the automated system offers consumers and financial providers the ability to immediately generate reports, transactional data and activities.
While a full digital transformation may not happen in an instant, delivering fast disbursements through instant financing can – and it can accelerate a financial provider’s path to digitalization while delighting customers, members and customers. communities along the way.