Pandemic accelerates the shift to digital

As this unprecedented global situation evolves, the importance of hygiene takes centre stage. Does Covid-19 signal the need for the end of cash?

As basic hygiene and physical distancing take centre stage, there is no question that the migration to cashless will be accelerated. I must mention that going cashless was a trend that banks were seeing long before Covid-19 became part of the equation. Of course, the virus has expedited this shift and both banks and customers across the globe have turned to digital services to ensure the safety of their customers, as well as the continuation of their services. In fact, apart from the inherent health advantages linked to cashless operations, electronic payments services also bring about a myriad of transparency, efficiency and accuracy benefits. Banks that already established strong digital platforms are well positioned to quickly adapt to a Covid-19 world. As people are increasingly avoiding human interaction, digitally savvy banks can continue to provide consumers with financial and banking services, maintain business continuity and mitigate the spread of the disease. In turn, banks with readily established digital platforms will likely experience a surge of traffic during this period and may even result in a permanent behavioural change among consumers.

At Standard Chartered, we are continuously encouraging our clients to leverage our online banking platform or the mobile app for money transfers and other needs. Even before Covid-19, the bank put a heavy focus on investing in our digital offering and this has definitely played a role in ensuring our customers have access to banking services in a safe way at this difficult time. Everything from checking of balances to the application of credit cards is available online, which is more important than ever.

With a move towards a cashless economy, there is concern that certain consumer bases may be financially excluded. How can banks and fintechs better leverage tech and digital channels to educate consumers, reach new consumers and ensure this isn’t the case?

Digital and mobile banking have served as ideal approaches to bridge the financial inclusion gap. Through digital and mobile channels, consumers who are unbanked are able to set up a bank account and access a full suite of financial offerings, without having to visit a physical branch. As such, digital offerings allow banks to service an entirely different consumer base, make a significant impact regarding financial inclusion, and contribute to overall economic growth and stability.

There is always a concern that reliance on digital channels may hinder the inclusion of certain consumer bases. However, our observation is that digital adoption is ageless. Of course, the adoption rate may be slow for certain customer bases. However, we have seen adoption across generations. For those who may be living with special needs such as people of determination, there are tools that are available and can help them to access and use the channels safely and effectively.

An abrupt move to a cashless business model causes mass disruption. Is the infrastructure in place for businesses to manage such an unparalleled surge in cashless payments?

This situation is very different across countries and geographies. There are some countries that are well ahead and ready.

However, a lot still has to be done in some parts of the world especially in the rural areas. Apart from service providers, there is a huge role to be played by policymakers and government authorities to maintain and enhance infrastructural integrity to fully facilitate the transition to a cashless society.

Given the current environment, digital is no longer one of the available options. In many cases, it has become the only option. The challenge therefore is no longer the rate of adoption, it’s availability.

Most Middle Eastern countries have made significant strides in this regard. For instance, the UAE has prioritised cashless payments as part of its ambitious Vision 2021 and has since introduced numerous efforts to achieve this. These initiatives include the introduction of the Emirates Digital Wallet and the establishment of numerous smart cities across the country.