The fintech sector has facilitated business growth during the pandemic. What seemed like an option in 2019, has become an imperative.
There has been a clear shift of digital payments from a nice idea to an essential service. Consumers started using digital payments for groceries, utility payments, etc and now it has become a preferred mode for all their transactions.
This has been propelled by two factors — convenience and the fear of infection which comes with managing cash. Our conversations with consumers indicate that this trend will continue in the post-Covid world as well. Another interesting trend that we have seen is the use of digital payments by what we call the Silver Tech generation — people in the age group of 50-70 years.
Exediting the adoption
According to IBM’s US Retail Index, the pandemic has accelerated the move from storefronts to e-commerce by five years. The ripple effect of e-commerce has fuelled fintech adoption rates. The mobile payments in India are said to grow by ~ 60 per cent by FY 2022.
As nations plan for the next normal, what should businesses be thinking about to succeed in 2021?
Although consumption continues to be low across economies, consumer spending on e-commerce platforms tell a different story. In October, e-commerce sales in India jumped to $ 4.1 billion – across the sale and festive days announced by e-commerce majors – up by $ 2.7 billion a year ago. This indicates green shoots of recovery in consumption.
Livestreaming
The new record set can be attributed to the convenience and safety of shopping from home. Another driver could be that brands and retailers who livestream or use modern technologies such as augmented reality (AI), appear to have a competitive edge, resonating strongly with their customers.
The hesitancy to handle cash will force the adoption of contactless and digital payments as the preferred transaction method both offline and online. In Q3, we saw 15.2 million new active accounts – our second highest quarter in organic user growth, coupled with 1.5 million new merchants come onboard – twice our usual rate in a quarter.
Consumer trust in e-commerce intensifies amidst pandemic
Salesforce’s State of the Connected Customer research report also found that consumers now spend 60 per cent of their time interacting with companies online compared to 42 per cent before the pandemic. By incorporating the Online to Offline (O2O) model, which refers to services such as online information, discounts or services, member rebates, in-store pick-up of items purchased online, or the allowing of online purchases to be returned to physical stores, to their business strategies, companies can improve customer experience, service and loyalty. On the O2O model, we also expect consumers to opt for payment methods that act as a bridge between online and offline, such as digital wallets offering QR codes.
On an average, 88 per cent of shopping carts globally are abandoned, with one of the most common reasons attributed to complex checkout processes.
For businesses looking to keep and grow their customer base in this competitive environment, a simpler, faster, more intuitive checkout process with seamless and safe payment options is critical.
India attracted $2.7 billion in fintech investment in 2020: KPMG
Building trust
This accelerated digital and e-commerce growth, unfortunately, has drawn unwanted attention from bad actors exploiting vulnerabilities for nefarious purposes. Email scams related to Covid-19 have surged in recent times. They will probably continue as scammers push our psychological buttons to acquire our personal and financial information.
With the changing times, consumer preferences have evolved. Retailers now need to review their business models to align to a new normal, where digital DNA will drive growth.
The author is Senior Vice-President, Europe and Australia Enterprise and Growth Markets, Paypal