Summit Speakers: COVID-19 Has Changed Banking and Payments
The COVID-19 pandemic has changed customer expectations and the way they operate in banking and finance, two presenters said Aug. 16 at the inaugural VenCent Fintech Summit held in Little Rock.
The summit is a gathering of banking and information technology professionals sponsored by The Venture Center, a Little Rock-based entrepreneur support organization. “Fintech” stands for “financial technology”.
Damon Moorer, President and CEO of Tampa-based TCM Bank, and Tina Giorgio, President and CEO, ICBA Bancard and Vice President, TCM Bank, hosted a presentation, “How the Pandemic Has Changed Our how to pay and what the future may hold. Moorer said after the shutdown ended, the bank saw a strong rebound in sales volume.
“Compared to pre-pandemic levels, credit spending has increased, the average dollar amount of monthly payments has also increased, and carried forward balances have decreased,” he said. “We’ve seen a huge shift from using cash to other payment methods including debit and credit. I would say cashless sites have become a thing – all of a sudden no cash is accepted .
Moorer said his bank has seen many “set and forget” transactions where the salesperson has the customer’s card and account on file. He said credit spending is still high. Customers are still using their cards, earning their rewards and redeeming their cards. He said rewards have always mattered, but today they matter more, especially travel rewards.
He said demand for the cards had increased and issuers were competing for business with specialized products for niche markets, lucrative introductory offers, the return of balance transfers and a focus on capturing new credit users, including younger ones.
Giorgio said consumers compare the financial institutions represented at the top to big tech companies like Amazon, which deals with one-click payments. She noted that Amazon offers a “frictionless redemption experience,” although it’s a closed-loop process involving only Amazon. She said that at any time there was $3 billion in PayPal wallets. In the first two quarters of 2022, Paypal had 429 million active users with an average balance of $485. All that money had temporarily left the banking system, she noted.
Moorer said most community banks don’t have big research and development budgets and don’t do a good job of building and maintaining fintech partnerships. Community banks, including his, are still hampered by manual, paper-intensive processes. Customized solutions are needed to enable banks to automate and streamline their operations.
Asked what handy fruit there is, Giorgio said many don’t have credit cards. She said they can remove friction in their processes and need to find a way to digitize in order to attract younger customers. She encouraged banks to ask their young employees what it’s like to open an account. They are potentially a great discussion group whose members do not have to be paid.