Federal Reserve Study Sheds Light on Post-Pandemic Consumer Demands

Many behaviors that were once touted as the “new normal” during the COVID-19 pandemic are now seemingly here to stay. COVID-19 shifted consumer behavior in many ways, including ways in which they interact with financial institutions. As social distancing practices emerged, account holders turned to online and mobile payment features at an increasing rate to satisfy their needs for safe, quick and efficient transactions. This exposed account holders to new avenues and opportunities on the frontier of payments.

In May 2022, the Federal Reserve Bank released results of a consumer survey that was conducted in the latter half of 2021. The survey, focused on faster payments, noted COVID-19 as impactful on consumer behavior in payment trends and found that consumers are ready for faster payment options through their financial institutions. Nearly 70% of consumers responded that faster payment capabilities are an important factor and likely to lead to higher levels of satisfaction.

Other findings within the survey revealed the use cases of person-to-business, person-to-person and account-to-account as most popular. Consumers expressed desire to utilize faster payments for last-minute bill payments, sending money to friends and family and transferring funds between their own personal accounts. When it comes to features of faster payments, fraud protection and payee confirmation were top priorities from respondents.

Despite consumers’ interest in faster payments, responses showed some degrees of uncertainty. One uncertainty that was implied was hesitancy to register on “yet another app” for financial services. This hesitancy, while it could act as a hurdle to overall adoption, may offer a leverage point to financial institutions to use to their advantage. Although consumers are utilizing digital wallets and Fintech apps to some degree, they are resistant to providing information to outside third parties.

Nearly two-thirds of surveyed consumers reported utilizing online and mobile features to manage their relationship with their primary financial institution(s). This indicates consumers’ familiarity with online and mobile services offered by their financial institutions and experience in utilizing features and functionalities within digital payment applications. Because account holders’ information already resides within highly secure infrastructure, perhaps they are more inclined to utilize faster payment services through the same applications they are already using. This gives financial institutions a competitive edge in becoming a one-stop shop for consumers’ interest in using faster payments.

The pandemic is subsiding, but the needs of account holders will continue to evolve. The shift in behavior that was thought to be temporary is now appearing with some permanence, including within the world of payments. Faster payments are gaining traction and showing little signs of stopping. Financial institutions would be wise to consider moving with this evolution and how their account holders are looking to do the same.