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Digital payments in a post-COVID world

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I recently saw the announcement from Santander of a foreign exchange service called PagoFX. It’s a service that goes head-to-head with TransferWise and is an interesting example of fighting back.

As a result, I asked Victoria Yasinetskaya, CMO at PagoFX to tell me a bit more about what’s happening and she kindly wrote this piece for me on how digital payments are changing the post-COVID world. Enjoy!

The Rise of Digital Payments in a Post-COVID World

Everyone’s predicting the end of cash, the rise of digital banking and the end of the branch due to the coronavirus crisis. But will it happen?

Let’s start with cash. Cash is dirty and spreads germs, but most people did what I did at the start of this crisis. I withdrew £1,000 in cash from the bank as I worried about what would happen if I couldn’t pay someone. I still have £1,000 in cash, but that worry is the reason why I did it, as have many of my friends.

However, whilst having physical cash in your hands can be reassuring, the ongoing pandemic has shone a light on the tremendous powers of technology we have at our fingertips and just how far it has come. It’s fair to say that if COVID-19 happened five or 10 years ago, technological capabilities might not have kept up and we wouldn’t have been kept as seamlessly connected as we have been, whether through Zoom calls, sending money to loved ones abroad or working remotely.

Similarly, 15 years ago, perception around digital banking and payments had to contend with customer anxiety and distrust, with cash the preferred, most trusted method of payment for the majority. However, trust and transparency now come part and parcel of the digital banking experience, with service providers actually at risk of losing customers if they don’t offer a fast and seamless service at the touch of an iPhone or laptop. Increasingly, banks are offering the kinds of service you might expect from fintechs, but backed up with the kind of security and customer service only they can provide.

Digital banking and payments were on the rise before COVID-19, but adoption has been accelerated since March of this year, with people downloading banking apps during lockdown more than ever before:

Six million people—or 12% of the UK’s adults—have made the switch to digital banking in recent weeks.

Naturally, with the rise of digital payments and services comes banks closing branches, reducing costs and allowing banks to focus more on digital services via devices. That’s not necessarily a bad thing. In fact, some might argue that the only reason a branch exists is to transact paper-based processes, many of which have been digitised in recent years.

We are automating everything. Software is eating the world. Perhaps we don’t need branches anymore.

Some could say the reduction and even removal of branches may lose that vital human connection and element of trust when it comes to finances. However, even the most traditional of banks have invested in their digital customer support, with instant online chat functions, social media interaction and troubleshooting, extensive FAQs and dedicated support teams working around the clock to help from afar. Even more so since the pandemic hit, the world is used to interacting through technology, with many preferring a solution from the comfort of their own living rooms rather than having to visit their nearest branch and wait in line.

It’s also fair to say that as a result of lockdown, people’s priorities and goals have shifted, with RightMove noting 1 million searches on a single day in June for properties abroad. This drive to buy property abroad is only made possible by international money transfers, both for purchasing and property maintenance, with international money transfer apps making this process seamless and instantaneous. This is just one example of how digital payments are set to flourish post-COVID in the new world we find ourselves in.

The question therefore for a traditional bank is how many physical access points are actually needed and why? A traditional bank, built upon physical foundations, has to ask what it needs to become in this new socially distant world? A traditional bank is built upon the physical distribution of paper through a network of buildings with humans. What does it need now to become a company built for digital distribution of data through a network of software and servers? And what would physical buildings and humans be needed for in that structure, if everything can be done just as efficiently, if not more so, via the internet? Perhaps it’s time to rethink what we mean when we use the term ‘traditional bank’ at all.

For a start-up payment service or challenger bank, I would be asking the opposite. You work well online, do you need to be offline? Do you need stores? What for? Can you be completely trusted with no physicality? By some customers yes, but by most? I would argue, yes, you absolutely can. But as security and reassurance are key in fintech, more and more individuals and businesses are looking for solutions with a proven track record, a strong balance sheet and rigorous standards.

All in all, there are fundamental questions around structure and operations and these questions have been brought to a head by the Coronavirus crisis. For the first time in my years, everyone has been stuck at home and locked down. For the first time in my memory, we have spent months not leaving the house but being connected globally via the web and seeing that it works. The internet has saved us during this crisis with digital payments allowing us to pay bills to keep our houses going, send money abroad when we haven’t been able to physically travel ourselves and donate to charities who are struggling more than ever to name but a few examples.

Whilst the world is slowly starting to open up again, it’s likely that many will remain reliant on technology to stay connected whilst social distancing and fears of a second wave remain. Although it feels like the world is on hold somewhat, payments still need to be made, whether domestically or across the globe, with digital services proving vital as we continue to adjust to the “new normal”.


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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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