What’s Next?: How 2020 Has Already Begun Shaping the Future of FinTech
While consumer sentiment and behavior are starting to show signs of optimism in the wake of the pandemic, there’s no denying that this year has introduced challenges that demand credit card providers adapt. In an effort to reduce points of contact and avoid crowds, many consumers tried new shopping behaviors that dealt blows to loyalty and drove a flight to digital that’s likely to persist.
Over the last few months, we’ve been helping card providers pivot their businesses in the right direction, and three trends seem to come up over and over. To be clear, we’re not saying these are industry-wide trends—not yet at least. But if you’re a card issuer and these things aren’t already on your radar, we’re suggesting they probably should be.
1. Digital Lending
Millennials represent $200 billion in spending power in the U.S. but are less likely than older generations to have a credit card. After all, they’re the generation that came of age during the 2008 recession and the rise in crippling student debt. How has the pandemic impacted their already complicated relationship with debt? They, along with others, have taken to financing their large financial purchases digitally.
To help lenders adapt, we’ve started working with our clients to embed lending into their existing products. With a well-designed app, lenders of any type can enable customers to apply for a loan or credit, get approved, and receive a virtual card for payment—all while they shop. Apps like these also establish an ongoing relationship— with built-in warranty, service, and rewards features—that can help restore trust and loyalty.
2. Virtual Rewards Programs
As unemployment and shutdowns strained consumer budgets, customer loyalty was put to the test. But through creative use of fintech apps, we enabled card providers to scale their rewards programs to businesses of any size, giving their networks and merchants a much needed boost.
With consumers doing their best to support their local economy during the pandemic, reward options that cater to small and medium businesses are more likely to draw customers in and increase loyalty. But it all comes down to execution: with fewer consumers shopping in-store, adoption depends on digital campaigns that encourage usage. Done right, card providers can support shopping local while strengthening the relationships that will carry them into the new normal ahead.
3. Contactless Payments
As a result of the pandemic, contactless payment usage is on the rise. In particular, the U.S. may finally be catching up to other parts of the world where contactless is ubiquitous. As consumers leverage this new payment behavior, chances are that contactless is here to stay.
Many of our clients are taking things a step further by leveraging contactless payments to enhance the end-to-end customer journey. Customers can now enjoy in-store engagement, rewards offers, and product-service pairing in real time as part of one frictionless experience.
What Is the Future of FinTech?
Despite loyalty struggles and the scramble to go digital, there are promising signs ahead. As discretionary spending increases in countries where COVID-19 is under control, it’s likely that consumers will choose to spend more on fewer experiences that are close to home. For financial service providers looking for a window into buying and borrowing in the new normal, digital solutions for lending, rewards, and payments are at the forefront of the journey ahead.