As a result of our collective COVID response, social distancing guidelines and in-person limitations have shifted consumer behaviors, both globally and domestically. While it may not seem business as usual, bills, payroll, and loan obligations still need to be fulfilled – despite market turmoil and historic unemployment. Now, more than ever, consumers need funds – whether in 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 truly meant driving to a bank and making a transaction at the counter or using the ATM. As digital platforms and devices continued to evolve, consumer behaviors did too. The digital-savvy world we currently thrive in has led consumers to become accustomed to the instantaneous nature of real-time, on-demand services. In a world of instant gratification, instant funding is not just possible, it is preferred, and rather quite attainable today.
This shift in human behavior and the way business is currently conducted supports the notion that financial institutions must continue to meet consumer expectations, or they may risk being left behind.
As we begin to assess ‘what’s next,’ it’s evident that the financial industry cannot wait for the new normal to arrive – it’s here. Financial providers should begin to reevaluate consumer behaviors during the pandemic, identify the key pain points, and develop a strategy to adequately meet consumer expectations and demands of the future, including rapid reliance and need for digital account access and control as well as on-the-go access to funds. By plotting a course through the recovery efforts, financial institutions will be able to turn better customer service and capabilities into stronger, long-lasting brand affinity.
While larger banks and financial service providers have been able to respond to the increase in consumer demand to digitize, it has been quite challenging for credit unions and independent providers. The traditional obstacles – resources, time, and budget – that once lay in the way to delivering frictionless consumer experiences, are now seen as items that can be addressed with the right process, network, and commitment.
Consumer Pain Points During COVID
Since March, COVID-19 upended our lives in what we felt like was an instant. As of June 1, more than 40 million Americans have filed for unemployment, and millions of businesses are scrambling to make payroll, pay rent, and remain afloat.
The Federal government’s stimulus program which launched into action in mid-April continues to remain a trending topic and discussions on the longevity of the program are still being held; millions of businesses have filed for PPP loans, inundating financial providers with loan applications with the hope to speed paperwork processing and distribute funding sooner rather than later.
According to a recent survey by MasterCard Contactless Consumer Polling ‘more than half (51%) of U.S. consumers say they are using cash less often or not at all since the pandemic began,’ indicating a change in consumer behavior when it comes to spending methods. While physical on-site access has been restricted, digital lobbies have opened the door to providing greater access at scale – on the consumers’ terms, on the go, or in isolation.
There has never been more of a critical time for consumers and businesses to have access to much-needed funds and on-demand services. To drive convenience, financial providers should consider offering a full range of on-demand, instant funding options.
Below, we’ve compiled four key benefits instant funding provides:
- Driving Convenience: Long gone are the days when customers or businesses need to issue 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, do-able, and here to stay. Financial providers should capitalize on this opportunity and utilize a funding network that is available 24/7/365. This form of accessibility will allow consumers to access their accounts and request and receive funds while on-the-go or in remote locations.
- Time to Get Pushy: Waiting for a check to clear can be a lengthy process and, at times, can take days or weeks. Push payments allow for funds to be accessible in a consumer’s account within minutes. Similar in concept to how a bank will pull from a consumer bank account for a debit, except in reverse. Both Visa Direct and MasterCard networks offer push payment processing capabilities allowing online lenders to approve fund delivery to a consumer’s prepaid card or bank-issued debit card within the same day.
- Digitized Loan Origination Options: Financial institutions have primarily relied on legacy systems, including paper processes that were established decades prior. Offering a full-scale digital alternative to paper applications allows consumers to bypass slow processing times and delayed disbursements saving time for consumers and providers. In short, the quicker the application process, the faster the fund availability.
- The Power of Tech and Data: Computers have proven to be an asset in storing files, and now, they can also read them. Rather than submitting paperwork and having to manually approve funding, technology can do the work in real-time. The speed of the automated system awards consumers and financial providers with the ability to generate reports, transactional data, and activity immediately.
While a complete digital transformation cannot happen in an instant, offering rapid disbursements through instant funding can – and it can accelerate a financial provider’s path toward digitization while delighting customers, members, and communities along the way.