Has the pandemic changed our banking habits?

It is often said that we are what we repeatedly do. While some believe that it takes about 21 days to establish a new habit, others might argue that it could be much longer. The pandemic has been in existence for about 18 months now and has definitely altered some of our banking habits. Over the past few weeks, I have been interacting with folks in my social circle, and here are a few banking habits that I witnessed.

1. Embracing Digital Banking: With the onset of the pandemic, organizations bolstered their Digital Transformation efforts. It was wonderful to see Canadians who did not grow up using technology embrace the digital banking migration journey. As banks launched new tools and features, consumers adopted the digital banking mindset, asking themselves the big question — do I really have to visit a branch during these times? Some banks witnessed a huge increase in senior clients?(65 years and older) signing up for digital banking and even set up a Senior Support Centre. Opening a new account seamlessly in minutes became the table-stakes for almost every financial institution. Here are some digital banking features/releases that my friends and family liked.

• ?Online Void Cheque and Draft generation
• Scheduling a branch visit / virtual meeting through websites
• ?Card management - setting online spending limits, freezing cards, and blocking payment
• Personalized Cash withdrawal limit set up for ABMs
• In-app alerts notifications for withdrawals and transactions

?2. A liking for Buy Now, Pay Later (BNPL) schemes: The temptation to buy something online in an instant was further enabled by BNPL. Canadians liked the idea of splitting their payments on purchases into smaller installments over a defined period of time. With little or no additional credit checks performed or credit applications needed, customers started using the scheme. They yet continued to take advantage of the rewards and insurance coverage on all their purchases. The Fintechs (Afterpay, Sezzle, Paybright, Klarna) were the ones to offer this earlier but the Canadian banks too launched this relatively new form of credit. A few examples include:??Royal Bank of Canada’s PayPlan (through a partnership with Alliance Data's Bread) and Scotiabank’s SelectPay plan.

3. Repayment of Credit Card Debt: It is no secret that Canadians love their credit cards. We love the rewards and the travel points that come with it. Not sure if people led a financially disciplined life, but credit card debt in Canada fell to a six-year low. This article states that delinquencies were happening at a much lower rate than pre-pandemic, as consumers continued to benefit from government financial support during the pandemic.. For several years, there have been genuine efforts to increase the financial wellness of Canadians, and I truly hope that this habit stays on post-pandemic.

?4. Experimenting with cryptocurrency: Although Tesla made an announcement that they would accept Bitcoin for payments, the world wasn't sure. Given the cost of using bitcoin and its volatility, using the crypto currency for normal, day-to-day transactions seemed impractical. But young Canadians started treating cryptocurrency as an asset class with a long-term forecast on gains. With all the noise around Dogecoin (that started out as a joke), adventurous young Canadians started moving their money outside of the bank to invest money in other places through a variety of different wallets. Globally, almost a trillion dollars are sitting in bitcoin at this point. In the next few years, we can see banks working to see if they can offer crypto services based on what regulators decide

?5.Carrying very little cash in our wallet: When the pandemic hit, concerns were raised if physical cash could spread the coronavirus. We soon realized that cash is no longer the king. A lot of establishments stopped taking cash, and the preference was for contactless payments. As people started shopping again from physical stores, contactless transactions appeared to be the preferred payment option. Perhaps this was the push required for Canada to become a cashless society.

?6. Interest in do-it-yourself (DIY) investing: For a few years now, Robo advisors and its set-and-forget-it approach have been a huge draw for young Canadians. With the stock market showing interesting trends and the recent Reddit mania, online investing increased in popularity. Canadians were eager to have greater control over their investment. Young Canadians educated themselves on investing through different sites, podcasts, YouTube channels, books, and even TikTok and started exploring apps like Wealthsimple Trade or Questrade. Using a self-directed approach, they began to establish their own ETF and Stock portfolio.

7. Adding a Prepaid card to our wallet: Today, almost all Canadians have an existing relationship with a bank, but we still saw the rise of prepaid cards during the pandemic. The year 2020 saw a 21 percent rise in the number of prepaid card companies - there are about 90 of them now. If you are wondering who is using them, these survey results offer some interesting insights. Young Canadians liked the prepaid cards that came with the challenger banks like Koho. Parents gave their kids/teen a card to easily track their?spending habits and teach them about savings - RBC Venture’s Mydoh is one such example. The other set of individuals using them was the gig economy, where contractors can receive wages on a prepaid card.

So, these were a few of the habits that I witnessed. I am eager to know if they resonate with you and if there are other banking habits you have developed. I would love to hear from you.