Nobody is sure how the coronavirus pandemic will end, whether it will go away, whether a vaccine is discovered or whether we have to learn to live with this for the next few months or more.
Says Sailesh Shah, Co-founder, Strta Consulting, “Like every part of the world, India is sitting on a fence that has COVID-19 on one side and economic activity stagnating on the other. That fine balance is critical as WHO is now stating that we may not be able to eradicate the virus any time soon.”
One thing is for sure. Our lives will change. And a lot of that change will be in our financial lives. “The COVID-19 pandemic is likely to leave a permanent imprint on consumers, countries and economies. There will be a ‘new normal’ for every aspect of our lives - be it business, personal or social,” says Prateek Mehta, Co-founder, Scripbox.
With social distancing norms in place, technology will play a bigger role in our financial lives. That is not to say that it was not already, but it will become a more intrinsic part of our financial lives and businesses that do not adopt will perish.
A McKinsey study reports that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks. “As people become cautious in their dealings in the physical world, they will increasingly lean on digital solutions to meet their existing demands - related to financial planning and investments. Today, every part of the investment journey - from asset allocation decisions to transactions – is seamless on digital. We expect this trend to only accelerate from hereon. We would also see that a lot of offline players will make the move to digital and touchless delivery of investment advisory services,” adds Mehta. Once the pandemic subsides, a ‘new normal’, with irrevocably changed behaviors and expectations of customers, may emerge. This will present a unique opportunity for FinTechs to bring end-to-end digitalisation to the creation and distribution of financial products. “Once the lockdown is lifted, Fintechs in neo-banking, lending and Investment segments, aided by favorable regulatory initiatives such as video KYC, account aggregators, MSME marketplaces, e-invoicing, may extend accelerated adoption of digital financial products among both retail and SME/MSME customers,” says Vivek Belgavi, Partner and Leader FinTech , PwC India.
Banking has been one of the earlier adopters of technology and in a post pandemic world, the way we bank is likely to change even further. “Customers will need to fulfil a range of banking transactions on a no-contact basis, completely digital without having to visit a branch. In this respect, banks will need to bring more and more services on to digital channels,” says Deepak Sharma, President & Chief Digital Officer, Kotak Mahindra Bank, which is the first to introduce a video KYC to open a full-service Kotak 811 account. IDFC Bank has also launched video KYC for opening of savings account. Going ahead, there will be increased usage of video conferencing as an alternative to physical interactions.
When it comes to investments, most of it is digital and the technology adoption is going to accelerate going ahead. According to Mehta, we are likely to see technology in all aspects of investing whether it is discovery, decision making, execution, operational support and ongoing management.
Not only will the way we invest change, there will also be a change on how people view investments “After the pandemic there will be a change in the way people think. They will go back to saving more because they realise that such emergency situations may come. In the last 12 years or so we have moved from a high saving nation to a high spending nation. I expect that to change,” says Prakash Gagdani, CEO, 5paisa.com.
This change in mindset of people with the lockdown plunging the economy in a crisis and expected salary cuts and job loss, will lead to a change in spending patterns and also why people take loans. In fact, as per a recent study conducted by BCG, 86 per cent of the respondents have shown concern over repayment of loans after the lockdown opens, which is a very high number.
“Due to the volatility of the employment scenario and the fear of job losses, consumers will postpone the purchase of not so essential items. We feel that this trend will last for entire 2020. New consumer durables purchases are likely to see a drop, at the same time the personal loans will be largely to meet the necessary like meeting the survival needs, medical needs, education and so on,” says Marko Carevic, Chief Marketing and Customer Experience Officer of Home Credit India.
Of course, technology will play a big role in loan disbursal as well. “Physical verification of borrowers at their residence and office is now replaced by e-verification where location mapping is done through geo-tagging, selfie and video interviews. Most of these processes are time and cost saving and we see no reason not to continue with them even in the post COVID-19 era,” says Rajat Gandhi, founder and CEO, Faircent.
The need for insurance and how we buy insurance will also see a significant change in a post coronavirus world. Says Vaidyanathan Ramani, head, product and innovation, policybazaar.com, “Customers will not be comfortable to walk into an insurance office or have some agent visit them. They will be comfortable to transact over calls, emails, apps and webpages.”
Naturally, people are more concerned about their health now and so the demand for health insurance is likely to go up. According to Prasun Sikdar, MD and CEO ManipalCigna Health Insurance Company, post pandemic the health insurance industry will focus on educating people about the importance of health insurance through various online and offline touch points. The company has already introduced digital services - for instance, policy holders can upload scanned claim documents using their app or by logging on the claims centre to initiate claim reimbursement. Customers can hence renew policies, generate claim status and buy health insurance policies from the comfort of their homes. Tele-underwriting where underwriting decisions are made based on a telephone interview to gather information related to risk is also becoming a norm.
“Even after the pandemic is over some of the habits we are creating will remain. Digital adoption will become more in vogue and replace many of the traditional sales channels like agents. Customers are also less dependent on human intervention and purchasing policies online,” says Dr. S. Prakash, MD, Star Health and Allied Insurance.
Financial advisory is also likely to change in a post-COVID-19 world. Says Renu Maheshwari, “Businesses that were on cloud could handle the lockdown more productively. It also gave them an opportunity to nudge the investor to come on line. Post COVID, most cloud based practices will continue. They are efficient, cost effective and give better output.” Also, as Maheswari points out, financial advisory will change from actions directed towards chasing market returns to fulfilling investor’s financial goals by choosing the most appropriate returns with focus on client’s life goals instead of focus on choice of products.
When it comes to homebuying technology will play a prominent role too. Virtual tours that augment the real estate experience will become more popular as a result of social distancing and help potential hommebuyers continue their searches for property in a digital manner. Going ahead one can expect homebuying not to be a series of discreet activities. “Rather we can expect one app where the entire ecosystem of the builder, financer, interior designer, furniture companies and e-commerce sites will collaborate in offering what is required to build a home,” says Sundaram Mallik, Marketing Head, PTC Inc.
The lockdown has meant that many of us are now working from home and since the virus is going to stay, work from home is likely to become the new norm. Our workplaces are also going to change. “Sanitising workspaces, maintaining social distancing norms, being able to operate remotely and being relevant and productive are some of them that are going to gain a predominance in the upcoming times,” says Priyank Parakh, Director-HR, GSK Consumer Healthcare. Additionally, you can expect the employer to engage with the employees regularly to boost their morale. GSK Consumer Healthcare has implemented e-engagement activities like creativity contests, learning marathon and desktop yoga, which is a platform for live yoga sessions for all employees. They have also launched an Employee Assistance Program (EAP) that helps access to a free, confidential telephone helpline and website for practical advice, information or support.
Finally, COVID-19 has changed how we will travel not just for now, for months to come. Forget planning for a summer holiday, we have not even left our homes in a long time. Will travelling ever be the same again?
Says Neerja Bhatia, Vice President, Indian Sub-continent, Etihad Airways, “The current pandemic will surely change air travel, keeping in mind the safety of all passengers as well as the airline and airport staff members. These changes won’t just be inside the aircraft, but at every step right from the moment you enter an airport. These would include stricter measures at check-in counters, thermal screening at airports and advance booking and social distancing in flights by keeping the middle seat free when guests are travelling on separate bookings. Agrees Nishant Patti, CEO and co-founder, EaseMyTrip.com, “Strict social distancing norms would be followed at all times via floor markings and queue managers will ensure the it is being followed across – at entry gate, check-in counters, self-check-in kiosks, security checkpoints, and the boarding area. Seating arrangements at the food court, lounges, terminal building and departure terminals are also expected to be reshuffled in a manner that promotes social distancing. Cashless transactions will be promoted across all restaurants and retail stores. Passengers will be encouraged to wear masks and sanitise their hands at regular intervals.” In-flight meals are also likely to be suspended till the situation normalises. Considering all these factors airfares are expected to increase to compensate for lower revenues and increased costs, unless the government announces some relief for the sector. Overall Patti believes that the travel sector will take a considerable time to return to regular levels. For the first three months people will only travel for essential reasons relating to work and education. Leisure travel is likely to pick up next with clear preference towards domestic destinations. The international destinations will start attracting crowds only when a vaccine is developed or things are totally back to normal.
The way we earn, invest, spend, travel is going for a transformation that was never envisaged even six months ago. A brave new world awaits us.