Outlook Money|June 2020
Let us accept it. The COVID-19 pandemic is one of the most significant events of this century, with far-reaching consequences. It is being compared to the two world wars and to the great depression, but the last time the entire world went through something like this was 100 years ago during the Spanish Flu pandemic.
Nobody is sure how the coronavirus pandemic will end, whether it will go away, whether a vaccine is discovered or whether we have to learn to live with this for the next few months or more.
Says Sailesh Shah, Co-founder, Strta Consulting, “Like every part of the world, India is sitting on a fence that has COVID-19 on one side and economic activity stagnating on the other. That fine balance is critical as WHO is now stating that we may not be able to eradicate the virus any time soon.”
One thing is for sure. Our lives will change. And a lot of that change will be in our financial lives. “The COVID-19 pandemic is likely to leave a permanent imprint on consumers, countries and economies. There will be a ‘new normal’ for every aspect of our lives - be it business, personal or social,” says Prateek Mehta, Co-founder, Scripbox.
With social distancing norms in place, technology will play a bigger role in our financial lives. That is not to say that it was not already, but it will become a more intrinsic part of our financial lives and businesses that do not adopt will perish.
A McKinsey study reports that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks. “As people become cautious in their dealings in the physical world, they will increasingly lean on digital solutions to meet their existing demands - related to financial planning and investments. Today, every part of the investment journey - from asset allocation decisions to transactions – is seamless on digital. We expect this trend to only accelerate from hereon. We would also see that a lot of offline players will make the move to digital and touchless delivery of investment advisory services,” adds Mehta. Once the pandemic subsides, a ‘new normal’, with irrevocably changed behaviors and expectations of customers, may emerge. This will present a unique opportunity for FinTechs to bring end-to-end digitalisation to the creation and distribution of financial products. “Once the lockdown is lifted, Fintechs in neo-banking, lending and Investment segments, aided by favorable regulatory initiatives such as video KYC, account aggregators, MSME marketplaces, e-invoicing, may extend accelerated adoption of digital financial products among both retail and SME/MSME customers,” says Vivek Belgavi, Partner and Leader FinTech, PwC India.
Banking has been one of the earlier adopters of technology and in a post-pandemic world, the way we bank is likely to change even further. “Customers will need to fulfil a range of banking transactions on a no-contact basis, completely digital without having to visit a branch. In this respect, banks will need to bring more and more services on to digital channels,” says Deepak Sharma, President & Chief Digital Officer, Kotak Mahindra Bank, which is the first to introduce a video KYC to open a full-service Kotak 811 account. IDFC Bank has also launched video KYC for opening of savings account. Going ahead, there will be increased usage of video conferencing as an alternative to physical interactions.
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