It’s a beautiful thing when financial services and technology come together. Known as “fintech,” this merger spurs constant improvements in the way we send, receive, transfer, and save money. In fact, chances are high that you’ve sent or received money from your smartphone in the past week. Thanks, fintech!
While conducting some of those digital transactions, you may have been taken to a third-party website called Plaid. This digital connection service allows you to safely connect a fintech platform, such as Venmo, to your financial institution.
In addition to making our lives a bit easier, Plaid is also known for industry research. Their recent report from The Fintech Series reveals how prevalent fintech is in our lives and offers some indications for where it might be headed in the future.
The survey was conducted with about 2,000 adults in the United States. Its specific purpose was to look deeper at the effects of COVID-19 on our relationship with fintech. The broader question: how have the challenges associated with COVID-19 changed the way we manage our financial lives?
While the use of fintech had been building long before this pandemic gripped the globe, adoption has dramatically increased during the COVID-19 era. Americans are using more fintech services than ever, and they utilize those services at a higher frequency and for a broader range of tasks.
“Fintech has been a lifeline for a majority of Americans during COVID-19,” explains the survey’s official summary. “Consumers overwhelmingly turned to fintech for their essential financial needs, providing a critical resource during a time of economic stress. Most people view fintech as their ‘new normal’ for managing money. People are forming new digital habits as a result of COVID-19, and the survey suggests those changes will become a ‘new normal’ for most.”
Let’s look at some of the survey’s key findings to understand better how fintech is becoming our nation’s preferred method for handling financial tasks.
- Over half of Americans use digital tools to manage their money
- 59% use more of these apps now than before the pandemic
- 69% consider fintech to be a lifeline during COVID-19
- Over half say they couldn’t manage their finances without fintech
- 73% plan to keep using fintech to manage their finances post-COVID-19
This final point is worth noting, as the influence of COVID-19 on fintech extends beyond safety-related functions such as contactless payment and transferring money without needing to visit a bank location. The vast majority of Americans intend to continue using the technology for tasks like budgeting, saving, sending money to friends, or building an emergency fund. Even sophisticated initiatives like investing, paying off debt, and bolstering your credit profile are increasingly being handled by fintech’s “new normal.”
Survey participants were asked if the following statement was true: “I can manage my money without going into a bank branch.” And a whopping 80% of respondents said they can handle all their money tasks without visiting a bank location. This is a stunning statistic, as brick-and-mortar locations for financial institutions will likely become obsolete for most Americans in the near future.
The permeation of fintech becomes more apparent through the survey’s revelation that daily use is increasing. This recurring use reveals the type of consumer habits that have true staying power. For example, the majority of those who rely on online banking for all their needs also use fintech for other purposes such as saving, filing taxes, and managing their credit profile.
“The future of fintech is digital,” insists a financial report from Payments Journal. “All the time, advancements like those in fintech are trending towards digital-only banks and currencies that exist only in a virtual space. Starting off the decade with a global pandemic has only increased the trend towards omnichannel digital services, meaning the financial service sector must learn how to accommodate high traffic across various platforms. Adapting means reaching users where they are at, onboarding the digital generation through remote methods, and catering to users with seamless payment processes.”
From a demographic standpoint, it’s unsurprising that younger generations are more prone to using digital tools. But Plaid’s research revealed that individuals who have children are also using fintech at a surprising rate, with the majority saying they use 5 or more such apps. The unique pressures of COVID-19 on families have increased use for parents who were already on the fintech bandwagon while also enticing late adopters to finally climb aboard.
It’s clear that most Americans have embraced fintech. These products are safer, more efficient, and more convenient than past methods for handling financing matters. The surge of users brought on by the COVID-19 pandemic will do more than add users to the existing apps and platforms—they’ll also drive innovation for new fintech products that’ll continue to simplify our lives through novel digital solutions.