Covid-19 is hastening the pace of digital transformation and innovation in banking, says Darragh Lennon of KBC Bank Ireland

The shift in consumer banking behaviours has been happening over the last ten years — the way we bank and the way we pay for things has all been changing. We have moved from using bank branches for basic services to now using our mobile phone, from cash to card and now digital payments. 

Up to the start of this year these changes were significant, but the pace of change until now could probably be categorised as slow and steady rather than transformational. Covid-19 has changed all of that.  

These changes were coming but Covid-19 has accelerated them significantly and they are here for the long term. At KBC, we have seen a significant shift in how our customers are seeking banking services and using their cards. 

The use of contactless payments and digital wallets such as Apple Pay,  Google Pay and Fitbit Pay has increased by 38% since the onset of Covid-19, and even as restrictions have eased this trend continues. 

The number of customers applying for products through our digital and direct channels has increased, with more than 80% of new customers choosing to join digitally since the start of Covid-19, up from 70%.  

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The latest figures from Banking and Payments Federation back up these trends, with contactless payments across the industry hitting a new high of €1.9 billion in Q2 2020, up 27%.

Modified Processes

As a digital first bank, we have been well placed to adapt to these changes, but we have had to adapt too. At the start of the pandemic we modified our lending processes to accommodate customers applying for a mortgage over the phone and online. As a result, the number of customers who applied for a mortgage through our website or over the phone was 165% higher in July 2020 than in July 2019.

What Covid-19 has taught us is that customer behaviour can change quickly and that in order to thrive we need to be as agile as our customers. In April, we completed a major upgrade of our core technology system to enable us to further accelerate our online and mobile innovations and be more flexible in the way we deliver solutions for customers. 

How consumers will shop for products such as pensions and investments is changing, and we are bringing more innovation to those markets to meet those changing behaviours. The pandemic has accelerated the pace of change across the banking sector and we will all need to be able keep pace with our customers to succeed.

Having strong foundations in place that support the pursuit of relentless innovation, will be what will help organisations win over the longer term.

• Darragh Lennon (pictured) is Director of Distribution at KBC Bank Ireland