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Meeting Customers Where They Are for Today’s Digital-First World

Nov 20, 2020

By Tina Giorgio


Tina Giorgio, President & CEO, ICBA Bancard

This year has brought a seismic shift in how consumers conduct their financial affairs. What was once a gradual move to digital payments and shopping methods has become a full-fledged sprint.

For community banks, the digital-first nature of today’s world creates an opportunity to forge deeper connections with existing customers, while attracting new customers. To fully leverage this approach, it is important to understand the key trends driving the digital payments landscape and develop a comprehensive digital strategy to accommodate your customers’ evolving needs.

Contactless payments usage grows

One of the most important trends since the pandemic’s onset has been the meteoric growth of contactless payments.

Visa, for example, reported that 31 million Americans used a VISA contactless card or digital wallet in March, up from 25 million in November 2019. The same report found that overall contactless card usage in America grew 150 percent since March 2019, with 175 million contactless cards now in circulation. This means the U.S. has the most contactless cards of any market globally.

But contactless cards aren’t the only form of contactless payments; digital wallets and other mobile payment apps provide consumers with a touch-free transaction method. Since the start of the pandemic, 11 percent of consumers have reported using a universal wallet through their smartphone for the first time, according to a Mercator Advisory Group survey.  As the following chart reveals, consumers are using additional contactless options, including QR codes and retailer wallets, at similar levels.

 TTDigitalExperience 

This expanded use of contactless payments is expected to continue beyond COVID-19, with 56 percent of U.S. consumers reporting that they will continue using contactless after the pandemic. And with 9 of the 10 largest U.S. issuers actively rolling out new contactless cards, it appears that the market is starting to adjust accordingly.

Growing demand for delivery, online ordering

The pandemic has also impacted the way consumers interact with the food service and retail industries, and these trends are something for community bankers to watch.

Since March, 42 percent of restaurants have added delivery services, often through partnerships with delivery firms with overall sales across the food delivery industry increasing by 51 percent since early March.

Online grocery sales and delivery are also on the rise, with more than 10 percent of U.S. grocery sales expected to come from online channels, by year end (double 2019 levels). Many retailers have embraced “Buy Online, Pick up in Store” and have even started curbside pickup options. By the end of 2020, curbside pickup is expected to become a $35 billion sales channel.

With consumers flocking to digital channels, it is no surprise that e-commerce is skyrocketing as well. In September, Amazon’s online sales increased by 43 percent year over year, reaching $60.4 billion in just that month. But it’s not just e-commerce behemoths like Amazon that are seeing remarkable growth. By the end of 2020, overall e-commerce sales are expected to grow by nearly 20 percent.

The striking growth of e-commerce has further accelerated the shift to digital shopping by roughly five years, according to data from IBM’s U.S. Retail Index, and the fastest growing segment is baby boomers.

Seize the opportunity, go digital first

Community banks can attract new customers and strengthen existing relationships by offering the digital experiences that consumers desire as they navigate this new way of life. For instance, 70 percent of consumers who are getting payment services or payment solutions elsewhere would prefer to use their community bank for those services if they were available.

Survey work conducted by Mercator Advisory Group also supports the idea that consumers are eager to adopt digital banking solutions from their trusted financial institution. A survey from June 2020 found that if a consumer’s financial institution offered a mobile app that allowed the consumer to control when and how their credit card could be used (based on factors such as location, spend amount, and shopping category), nearly 41 percent of respondents would be very likely or likely to use it.

Digital wallets should include more than just card controls, however. Transaction alerts, dispute resolution capabilities, the ability to pay your credit card bill, and financial management assistance should all be included features.

Consumer expectations for convenient, simple, and seamless experiences are central to understanding the trends noted above and how community banks should develop their digital offerings.

Considering that contactless payments are up to 10 times faster than traditional payment methods, it is not surprising that consumers find them to be more convenient. Online shopping and beefed up delivery options offer similar levels of ease and convenience and helps consumers conduct activity on their own terms.

This same applies to community banks as they transition to digital-first strategies with the preferences of customers front and center. Because when it comes down to it, ensuring a satisfactory customer experience is what matters most.  

Learn more about ICBA Bancard’s offerings to support your bank’s efforts to facilitate anywhere, anytime digital payments for your customers.

Tina Giorgio is president and CEO of ICBA Bancard.