Digitization of the financial sector to curb the perverse effects of the health crisis

In a 21st century marked by strong digitization, the digitization of the financial sector is experiencing exceptional momentum. With the global health crisis caused by the new coronavirus, it has even experienced an even more significant development.

It is not really necessary to rack our brains very much to understand why this digitization has become a much more important issue in these times of confinement. Indeed, it has logically and quickly become an effective means of adaptation to the constraints imposed by the pandemic.

This article invites you to discover concretely how the digitalization of the financial sector represents a considerable asset in the face of the current health crisis.

Digital: an impact that was already significant before the crisis

Technical progress has always shaped and supported many sectors, especially the financial sector. Digitization was therefore easily adopted in this field, becoming an essential tool over the years.

This digital transformation has enabled companies to work faster by developing new methods and tools to adapt offers to customer needs.

The result is unprecedented insofar as several financial services are now accessible on the internet. For example, you can very easily carry out an online simulation as part of the loan application.

In addition, apart from a normal adaptation to digitization, the fintech boom has also contributed to a rapid evolution of the digitization of the financial sector. Fintechs are young companies that use digital technology to modernize banking and financial services.

The health crisis as a catalyst for the acceleration of the digitalization of the financial sector

According to The Economist (an international weekly), the confinement imposed by the health crisis led to an increase in the share of cashless transactions worldwide.

Forecasts indicated that these levels would normally be reached in two to five years. Indeed, in America, for example, mobile banking traffic has increased by over 85%. Also, in April 2020, online registrations exceeded 200%. Specifically in the United States, distance payments tripled as of March 2020.

All this has led to the closure of many banks in several countries around the world, such as Brazil, where the process began in 2020. The Covid-19 will massively and gradually lead to the digitalization of the economy.

A digitized financial sector for sustainable adaptation to the pandemic

The pandemic has imposed a lockdown on customers of banks and other financial services that has arguably created new needs.

Digitization therefore quickly emerged as an appropriate response to serve the customer remotely and ensure business continuity in this sector.

The daily use of digital and mobile banking is an important factor in adapting to the crisis and for the recovery of the global economy. In addition, the people most vulnerable to the health crisis will be able to cope better thanks to digital services.

Many innovations to better adapt to the context of the crisis

Digital banks are adapting their remote services to meet new customer needs. Innovation is then there to allow banks to meet the challenges of competition.

However, this challenge is not the most important to take up in the current context of the crisis. Rather, it is necessary develop solidarity initiatives for the most fragile customers who are especially unable to travel.

Many services adapted to the current crisis then emerged as part of the digitization of the financial sector. For example, there are online banks that offer life insurance unblocking or mortgage loan repayment services.

Also, more and more neobanks have emerged to facilitate the opening of bank accounts. They also promote rapid access to a bank card and access to an account for a customer who is prohibited from banking.

In addition, payment services are simplified to allow remote collection and easier access to e-commerce. Loans are also simplified and aggregators are available for budget coaching.

In short, the digitization of sectors is an undeniable asset in the context of the health crisis linked to the coronavirus. As a result, the digitalization of the financial sector is the spearhead to turn around an economy greatly weakened by the pandemic.