Consumers More Comfortable in Grocery Stores and Pharmacies Than Bank Branches
A survey of 2,028 U.S. consumers in late March found that 52% of those who regularly visited a bank branch prior to the COVID-19 pandemic are now avoiding them and 39% are reducing their visits. Only 8% are visiting branches as normal. By contrast just 14% are avoiding grocery stores and 30% are avoiding pharmacies. The survey, conducted by retailing software provider Qudini, also probed consumer preferences for using phone or video banking in lieu of in-person service. Phone was preferred over video 55% to 17%.
Huge Jump in Banking App Downloads Propels Double-Digit Revenue Gains
U.S. banking app installations spiked by 60% during the heart of the stay-at-home period in the first half of April, according to data from marketing analytics firm AppsFlyer, as reported by Mobile Marketer. In addition, digital banking apps increased revenue by 17% worldwide, AppsFlyer found. By comparison, in-app purchase revenue overall in the U.S. jumped by 22%, led by a 23% gain from food delivery apps.
Digital Channel Victory in COVID-19 Era Somewhat Less Than It Seems
Backers of digital banking technology can be forgiven if they see the massive introduction of some hold-outs to mobile and other digital channels as the shape of things to come. However, in a blog on Forbes Jennifer Tescher, founder and CEO of the Financial Health Network, says the shifts seen are misleading because many lower-income consumers can’t afford the tools necessary to use digital services. In addition, most apps are written only in English, making them inaccessible to many immigrants in the U.S.
“The pandemic has made clear that what we thought was a shrinking digital divide is actually a massive chasm, one that continues to widen as access to COVID-19 aid, information and support is conditioned on access to technology that millions still lack,” writes Tescher.
Even as PPP Round Two Continues, Forgiveness Issues Loom
Amid the press to get Paycheck Protection Program funds into the hands of small business, the issue of the forgiveness stage of the program lurks.
What makes it tricky is that the rules require a company to spend at least 75% of their PPP loan over eight weeks on payroll. As a report by CBS News illustrates, some small businesses say they will find this difficult. One reason is that many are in non-essential businesses and still can’t open, or open completely, which lessens the need for staff. Another reason is that many people in lower-paid jobs are actually making more money on unemployment, with a special $600 kicker added under federal legislation through July 31.
( Read More: Key Lessons About the Payroll Protection Program for Financial Institutions )
Forbes blogger Ron Shevlin, Managing Director of Fintech Research at Cornerstone Advisors, writes that “the headaches for small businesses and banks have only just begun.” Helping PPP participants figure out forgiveness will be complicated, especially for firms with unsophisticated accounting software. While many smaller banks hope their PPP efforts will win them new customers, Shevlin suggests that the back end of the program will determine how they look. “Community banks are looking at a big opportunity with small businesses — if they can overcome the loan forgiveness nightmare,” Shevlin writes.
Many questions concerning forgiveness remain to be answered in pending — and overdue — interim final rules from the Small Business Administration. Groups such as the American Institute for Certified Public Accountants have issued recommendations for filling in gray areas.
A report by the law firm Holland & Knight LLP covers what was known as of May 4.