With bank branches closed, consumers turned to fintech apps to help them manage their finances. For many of them, this was the first time they've really turned outwards from their banking relationships. Others, though familiar with fintech, doubled-down on their usage of new digital finance software. With job losses and reductions of income, Americans turned to fintech.
Fintech adoption is increasing globally, according to the 2020 Fintech Report published by Plaid. The report, which surveyed 2000 people in the US, found that the majority of people used fintech before the crisis, but COVID-19 accelerated their usage of fintech for more financial tasks and with more frequency.
COVID-19 disrupted the processes and routines people had to manage their money. 59% of Americans said they use more apps and digital tools to manage their finances now versus before the pandemic hit. Even people who didn't use fintech at all started to. 48% of non-users agreed that their usage had increased. Two-thirds (66%) also say they plan to use fintech more often for at least one financial task, from budgeting and saving to investing and paying off debts, as a result of the pandemic.
People are using more apps. During COVID, 13% of people reported they used more than 6 financial apps. That's up from 8% before the pandemic.
More frequent usage
People aren't just using more fintech apps to manage their finances -- they're also using them more frequently. Before COVID hit, 37% of people surveyed by Plaid said they used fintech apps daily. That number rose to 44% during the crisis.
30% or more of respondents said that due to COVID-19, they’re relying on fintech for the more complex parts of financial management, like investing, managing their credit scores, and paying off student loans and personal debt.
Expanding use cases
For many Americans, fintech proved to be a lifeline. With branches closed and cash seen as a powerful vector in transmitting the virus, people needed to use financial apps and software to access their money. That means they used fintech for more activities, like banking (34%) and savings (34%). It also means they turned to fintech more frequently for paying other people (33%) and investing (32%).
69% of Americans found fintech to be a lifeline during COVID-19. More than half say they could not have kept up with their finances during COVID-19 if it weren't for digital apps, products and services.
Interestingly, people who are married or have kids are more likely to say they use more than 5 fintech apps before, during and after COVID . They also manage a higher proportion of their finances digitally during all 3 phases.
Fintech is the new normal
As the pandemic wears on and we prepare to reopen, people have created new habits around their finances. Where they once turned to a bank branch to handle certain activities, they are now more likely to use an app to complete the same task. 73% of Americans believe that fintech is the new normal.
Before the pandemic, respondents used fintech to manage just over half their financial activities. But during COVID-19, with branches closed, they handled 62% of their finances digitally. That number is expected to stay that high, even when things open up.
Ultimately, more than half say they could never go back to a world of bank branches and paper statements. The reasons are numerous why people don't want to go back: those who used fintech during COVID found that it saved them time (57%), saved them money (42%), and reduced the stress or fear of managing their money (37%).