How the digital surge will reshape finance

All change

The shift goes beyond cards. Hiroki Takeuchi of GoCardless, which helps companies collect payments from bank accounts, says many membership businesses like gyms took the opportunity of shutdowns to upgrade from cash registers to direct debits. Consumers are using peer-to-peer (p2p) services to send money to relatives or buy fitness classes online. Payments processed in America by Venmo, a p2p firm, grew by 50% year-on-year in the second quarter.

Outside the West, mobile wallets, with which you can pay after loading money on to your phone, were becoming commonplace even before the pandemic. The virus has given them a leg up (帮助). A third of Singapore’s 18,000 street hawkers (叫卖小贩) let consumers pay by scanning a qr code in July, a boost of over 50% in just two months. Many governments in Africa declared these wallets essential services and banned transfer fees. Amounts held in m-pesa, a mobile-money service ubiquitous in Kenya, rose (上升) by a fifth in the month of May alone.

Digitisation is also racing ahead in other areas of finance. As millions of households received stimulus cheques and furlough (休假) payments, many took to betting on stocks (投注股票) from their sofas using zero-fee e-brokers (零费率的电子经纪人). Keith Denerstein of td Ameritrade, one such broker, says customers worldwide have opened 50% more accounts in 2020 than in its best full year. Meanwhile insurers that relied on agents to sell policies have learnt to do without. Sachin Shah, who runs the South-East Asian unit of Manulife, says 97% of its products can now be bought online.

Banking—the core of retail finance—has not been immune to change. Western lenders report surging connections to their apps and digital sales. Adoption is even faster in emerging markets, reflecting a lower starting point. José Antonio Álvarez, chief executive of Santander, a Spanish banking group that spans three continents, says the use of its digital channels rose by 20% in Europe, 30% in South America and 50% in Mexico in the first half of the year, compared with the first half of 2019.

Digital finance, already a force for inclusion, has brought yet more people into the banking system in recent months. In April dbs, Singapore’s biggest lender, opened 40,000 accounts for migrants in a weekend so that they could send money home digitally. Brazil’s government, which has extended aid to 60m people, is increasingly using the mobile route to reach citizens in the Amazon. Joshua Oigara, the boss of kcb, Kenya’s largest bank, says the number of customers using its app has doubled since covid-19 struck. These moved 35bn shillings ($329m) from their mobile wallets to bank accounts in June—six times more than in January.

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