A new study from leading strategic insights consultancy Nature reveals that the global pandemic has resulted in Australians becoming more engaged with their financial affairs.
Nature’s research, titled ‘The Way We Bank’, claims 36 per cent of Australians have been negatively affected by COVID-19, while almost two-thirds (61 per cent) think now is a good time to “shake things up” in the banking industry.
For 63 per cent of Australians, saving money has become much more important than ever before and 43 per cent of Australians have reviewed or created their budget and savings for the first time during the pandemic and will continue to do so.
Additionally, 35 per cent of Australians are regularly reviewing the market for alternative financial products, which paves the way for an uptick in money management apps and services.
Nature managing director and partner, Melbourne, Justin Connally, said: “With consumers being forced online, traditional banks have had to prioritise digital transformation and online customer service initiatives to ensure they can continue to support their customers.
“However, with restrictions now easing across the nation and ‘traditional’ ways of banking—i.e. in-branch—becoming safe once again, will consumers fall back into these traditional ways or are their new behaviours here to stay?”
Connally believes the latter, predicting banking will not fall back to its traditional delivery.
“Also, given that more Australians are working from home and will continue to do so, the demand for online banking services accessible from anywhere has increased and will stay that way.”
Neobanks have a golden opportunity to grow
As Australians become more comfortable with online banking, traditional banks risk losing consumers to emergent ‘neobanks’, banks set up with a solely online presence.
However, awareness of neobanks is low: 67 per cent of people have never heard of neobanks and prompted awareness of the leading neobank, Up, is just 32 per cent.
Eighty-two per cent of Australians aged under 55 are already open to the idea of using a digital-only bank for at least one product, Nature found, but this doesn’t mean it will be their main financial service.
Connally said: “The heightened sense of uncertainty in the wake of the pandemic allows the traditional banks to retain a level of trust that neobanks are yet to build.
“Switching to a neobank as their primary financial institution could be too risky and complicated a change for people to undertake, which begs the question: are Australians looking for short-term fixes to ride the pandemic out before implementing any major changes to how they manage their financial affairs?”
Digital ‘money management’ tools are trending
Sixty per cent of all Australians negatively affected by COVID-19 expect the next few years to be very difficult for themselves or their family, or both, Nature found.
Consequently, they are turning to digital tools as quick fixes for planning for the future.
One in three (36 per cent) are using a budgeting app, 38 per cent are constantly tracking every dollar they spend, and 44 per cent of Australians are tracking their spending from time to time.
Buy now, pay later will not slow anytime soon
For many Australians negatively affected by COVID-19, the next 12 months will be paid through instalments as a growing number of people turn to BNPL services to pay for a wide range of products and services.
According to Nature, the categories of products and services that consumers who have negatively affectively financially are most likely to use BNPL services for are:
- Furniture and homewares (49 per cent)
- Tech and electronics (49 per cent)
- Holiday bookings (41 per cent)
- Apparel (37 per cent)
- Energy bills (33 per cent)
- Grocery shopping (28 per cent)
- Alcohol (22 per cent).
For many, Christmas and the holiday season will be paid through instalments: 42 per cent of Australians are considering using a BNPL service for their upcoming Christmas purchases, while 24 per cent are very likely to use BNPL.
“Looking back at the tumultuous year, it’s not surprising that BNPL services are the favourite short-term fix for those negatively financially affected by COVID-19,” Connally said.
“This allows people to put their bills ‘on hold’ and retain a sense of financial normalcy. It also provides extra time and disposable income during a time when it feels most warranted.
“People who suffered most during the year feel the most deserving of a break. A strong bounce back in the travel/dining industry is expected, with 42 per cent of Australians predicting they will spend more on such experiences in the future. Most of us agree it is time to have fun.”
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