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Articles | June 10, 2020

COVID-19’s Impact on Financial Institution Customers

Steve Holdych Bree Basham
Steve Holdych, Bree Basham

Understanding customer preferences and preparing for a new banking paradigm

May, 2020 Update

The novel coronavirus (COVID-19) pandemic has brought much uncertainty to our world. The toll it has taken on individuals and businesses has been significant, and the economy has been devastated.

The International Monetary Fund’s World Uncertainty Index, which is based on data gathered in Q4 of 2019 and published in January of 2020, indicates that the level of global uncertainty is historically high.i These results are especially concerning given that it was published before COVID-19 drove global production to historic lows, overwhelmed hospitals in some of the world’s largest cities, and negatively impacted the lives of millions of families.

In the United States, the toll the virus has taken on individuals and the economy is devastating. The real unemployment rate, which includes those not looking for work, has exploded to highs not seen since the 1930s with more than 40 million workers filing unemployment claims since mid-March.ii

Many industries are experiencing significant declines in demand resulting from policies enacted to prevent viral spread, yet financial institutions seem to be better positioned to weather the storm. Banks have taken numerous steps to implement business continuity plans, including safeguarding the health and safety of employees; implementing travel bans; promoting remote work (and using alternative methods to serve customers); and directing efforts to help those most impacted by COVID-19, including their customers and communities. Some have even created marketing campaigns to share their response.

But the pandemic and resulting economic downturn continue to evolve. As such, financial institutions must remain alert, paying careful attention to ongoing developments and being mindful of customers’ needs.

This article explores the results of two surveys conducted in March and May understand the impacts of COVID-19 on customers’ financial decisions and perception of their financial institution’s response.

Sentiment has shifted over the last few months –  and will continue to evolve – but we hope these insights help financial institutions better engage with customers and identify new opportunities in a post-COVID-19 environment.

Continue to the full report below.

Full Report





Key Insight: Those most impacted need guidance to attain financial success

The COVID-19 crisis has brought with it much change, not least of which is the current economic downturn. Nearly 79 million Americans, or 48 percent of the private workforce, are employed by small businesses that have been severely impacted by the isolation or quarantine of consumer groups.vii Many of these businesses have had to take drastic measures to alleviate short-term cash flow pressure and retain long-term viability. Those severe steps (e.g., layoffs or furloughs) have resulted in economic strain to tens of millions of Americans. Our survey validates this, with 64 percent of respondents suggesting that COVID-19 has had an impact on their finances. On a positive note, these numbers have trended down slightly since we ran this survey in late March, where 71% indicated an impact. We also found that 24 percent are experiencing a major impact, down from 33 percent in March.

The impact on young to middle-age adults remains particularly acute. In March, we found that individuals under the age of 37, particularly those in Generation Z (Gen Z, ages 18-26), were most impacted; in May, Generation X respondents (ages 38-50) were slightly more impacted, at 78 percent, versus Gen Z, at 77 percent.

Younger generations are also more likely to re-evaluate their financial decisions. In fact, the majority (59 percent in March, 54 percent in May) of Gen Zs and Millennials (ages 27-37) will put a financial decision on hold in response to COVID-19. Buying or selling a vehicle (16 percent, compared with 19 percent in March), applying for a credit card (16 percent), and buying or selling a house (12 percent versus 14 percent in March) are all decisions that have been impacted. Fifty-eight percent of Gen Z respondents (down from 60 percent in March) are more likely to take action to secure a better financial future, including investing in the stock market (15 percent, down from 17 percent in March), meeting with a financial advisor (16 percent, up from 15 percent in March) or taking out a personal loan (16 percent versus 14 percent in March).

Other groups are also feeling the effects of COVID-19. For respondents with incomes between $100,000-$125,000, 74 percent of March respondents felt COVID-19 would have a medium to major impact on their finances in March. This slightly increased in May, with 76 percent of respondents making over $100,000 expressing concern over the impact of COVID-19. And those with incomes above $125k indicating a major impact grew by 11% since March.

Despite the impact that COVID-19 is having on most respondents’ finances, a majority indicated that the pandemic has not made them consider changing any financial decisions – and this percentage is increasing, from 51 percent in March to 61 percent in May.


Key Insight: Customers should be eased into new communication habit

The pandemic has forced many people around the globe to self-isolate or quarantine themselves at home. In the United States, strict stay-at-home orders have had significant impacts to the way people work and procure services. Within the banking industry, one of the largest changes is that online banking has become a more critical service than ever before because in-person banking is largely unavailable and the use of ATMs may not be viewed as vital.

Our research found that respondents prefer to accomplish banking tasks via a website (53 percent in March, 52 percent in May), as well as using a mobile application (44 percent in March, 47 percent in May). This is particularly true for individuals between the ages of 18 and 50, 60 percent of whom prefer a mobile user experience (down from 68 percent in March). On the other hand, almost twice as many Baby Boomers (ages 51-69) and Silent Generationers (ages 70+) prefer online banking over a mobile experience.

While the current environment has made technology even more essential to everyday life, the data showed a similar pattern in customers’ financial lives. The most striking increase was among those majorly impacted by the pandemic; this group showed a 30% increase overall in the importance of cutting-edge technology in their banking experience. These preferences may merely be a side effect of the pandemic. Indeed, our research found that the majority of Americans (58 percent) expect to return to their normal banking habits once the crisis ends. So while customers across all age categories are capable of accomplishing tasks online, it is not the preference for many (especially those over age 50).

A surprising number of respondents expressed an interest in engaging with associates. In fact, the desire to speak to a live person has significantly increased during the COVID-19 pandemic, with 47 percent of our May survey respondents indicating a preference for speaking with an associate on the phone (compared with just 4 percent before the pandemic — a considerable difference). And the number of respondents open to meeting with an associate virtually using their mobile phone, tablet, or computer has also increased, from 15 percent in March to 19 percent in May.

We also found that customers may be open to non-traditional communications that can still provide a personal touch, such as online chat, which 33 percent of the 18-50 age bracket indicated they would consider (up from 30 percent in March).

The crisis has undoubtedly forced many institutions to consider new ways of communicating with clients. But while digital banking has become a necessity for many, financial institutions must ensure all customer groups are comfortable completing banking tasks online. Indeed, our research proves there is no one-size-fits-all solution; banks should adapt their communications approach to account for their customers’ varied needs — keeping in mind that many desire real-time and face-to-face interactions during uncertain times. Creating personalized and informative online or virtual experiences will be critical in gaining the approval of those over 50 years of age. Innovation should embrace scalability, as our data indicates customer preferences will continue to fluctuate during and after the pandemic.


Key Insight: The “right” support is critical to maintaining relationships

Thirty-three percent of our March respondents felt heavily impacted by COVID-19. While our more recent survey found this has decreased to 24 percent, there remain a significant number of Americans who are seeking a trusted banking partner who knows how to meet their needs during and after the crisis. Responding to the needs of customers will be key to maintaining and growing those relationships.

As might be expected, the more severe the impact of COVID-19, the more likely a respondent is to change their habits. In fact, 70% of respondents facing a major financial impact due to COVID-19 say it will change how often they visit their local financial institution. About a quarter (29 percent in May, 24 percent in March) of all respondents are less likely to visit their bank’s branch after the crisis subsides, yet there are those that are more likely to visit a branch (13 percent in May, compared with 14 percent in March). Of those respondents who expect to visit a branch more than before, nearly one-third (31 percent, up from 24 percent in March) have considered meeting with a financial services associate as a direct result of COVID-19.

Surprisingly, several respondents expressed an interest in a traditional drive-through experience (via write-in response). It is clear that many customers are seeking some form of human interaction — even if that interaction is online. This provides an opportunity for financial institutions to enhance the “human” element provided through a variety of digital channels.

Satisfaction with a financial institution’s response to COVID-19 is also something banks should take into account. More than three quarters of respondents, are satisfied with their bank’s response to COVID-19, with the percentage growing from 75 percent in March to 82 percent in May.

Yet those facing a major financial impact were most critical of their financial institution’s response, with 10 percent of that group indicating they were unsatisfied or very unsatisfied.

 Among age groups, Gen Z is the most unsatisfied with their current bank’s response, with nearly 13 percent unsatisfied or very unsatisfied; the good news for banks is that this is down from 20 percent in March. Interestingly, chat (26 percent in May, 22 percent in March) and virtual communications (19 percent in May, 15 percent in March) are also unsatisfied, possibly because they feel the need for more options during the pandemic. For unsatisfied customers — particularly those most impacted by COVID-19 — consider new ways in which to demonstrate empathy.

Fortunately for banks, there is a low chance that customers who are impacted by COVID-19 will switch financial institutions due exclusively to their bank’s pandemic response. Although economic changes do not have much impact on customers’ decisions to switch financial institutions, other factors do: two-thirds of those aged 51+ said they would switch banks because of a poor experience (significantly higher than respondents aged 18-50, at 11 percent).

In making the decision to switch, the vast majority of all respondents (71 percent in March, 67 percent in May) included a bank’s reputation in their top three factors when picking a new financial institution. This underscores how important it is for banks to continually track the evolving needs of their customers and to foster loyalty by developing well- crafted response plans.


Key Insight: Most are optimistic about recovery time

Americans are more optimistic about their personal financial situation than they are about the economy as a whole. Nevertheless, there is some optimism about an economic recovery. Across age groups, a majority of survey respondents believe the economy will take anywhere from six months to one year (22 percent, down from 30 percent in March) or one to two years (34 percent, up from 26 percent in March) to recover. As a whole, these numbers remain the same; however, more Americans believe it will take a longer time for the economy to recover now than in March with a greater percentage suggesting it will be one to two years or two to five years. 

Younger respondents tend to be more optimistic, with 80% of Gen Z and 77% of Millennials indicating they believe the economy will recover in under two years. On the other hand, 89 percent of individuals in the 70-75 age group expect the economy to take six months or longer to recover, up from 87 percent in March. Perhaps this correlates with older generations’ exposure to previous financial downturns, given that there were 11 recessions between 1948 and 2011.viii The most recent economic downturn, The Great Recession, lasted 18 months.ix

Despite any doubts about the economy, few people are putting large financial decisions on hold for a long period of time, regardless of the economy’s recovery. In March, one third of respondents expected to put large financial decisions on hold for up to three months, while only 12 percent expected the economy to recover by that time. Two months later, the number of respondents who are putting large financial decisions on hold has held steady, with the number of respondents who expect the economy to recover in that time frame growing to 15 percent.

For those putting financial decisions on hold, the delay will be short. Over half of those putting financial decisions on hold believe those purchases will be delayed for less than six months, including buying and selling a vehicle (36 percent in March, 32 percent in May), buying and selling a house (26 percent, 15 percent in May), and applying for a credit card (22 percent in March, 28 percent in May).


The events of the past several months have had an immense impact on the world. Our surveys demonstrate that financial institution customers are no exception. Their financial behaviors are, and will continue to be, affected by COVID-19. It is impossible to tell what the next several weeks and months hold, but what is clear is that we’re entering into a new paradigm in which the way consumers interact with financial institutions (and other businesses) will change.

So what does this mean for financial institutions? Leaders have an opportunity to take meaningful action based on these recommendations:

Humanize Digital Interactions

Our research indicates that many customers desire some form of interaction — and will continue to post-COVID-19. There’s an opportunity for financial institutions to improve the call center experience for associates and customers and optimize digital channels, including self-service ones. Adding a human element to interactions on digital or virtual channels will go a long way to maintaining customer loyalty. This might include using voice- and video-based chats, creating persona-based interactions, applying data to optimize the customer experience — even simply making it easy for those new to digital channels. While many are focused on mitigating the risks associated with COVID-19, leaders should be thinking about what’s next: the new paradigm. There’s a tremendous opportunity for financial institutions to win the hearts and minds of customers and position themselves for a bright future.

Be a Leader in What Matters Most

While customers are not likely to switch banks due to COVID-19 or the economic downturn, they are willing to switch for other reasons. Focus on creating customer-centric experiences that build confidence and trust; assure customers you are there for them during what may be a very difficult time. This may mean offering extra support and financial flexibility, such as payment relief, for those especially impacted. Keep in mind that, for older customers, privacy and security are important. Younger customers want smarter personalization and an experience that is tailored to their needs.

Offer a More Digital, Physical Experience

A surprising number of our survey respondents expect to visit a branch after the pandemic ends. Chances are, your branches are not set up to support social distancing — whether mandated or preferred. Minimizing the amount of people in one branch will likely be important in the near term. Explore strategies to reduce physical interactions by leveraging a touchless, mobile-first experience.

Continue to Enhance Existing Offerings

Most customers are prepared to act on their financial decisions before the economy fully recovers. Optimize existing flows and systems to encourage customers prepared to make financial decisions in the next several months. This might involve adjusting current service channels, improving tools for associates, and enhancing the content, tools, and educational insights available to customers.


Our nationally representative surveys asked how COVID-19 has impacted personal finances and shifts in banking behavior to comply with new norms. Additional questions sought to better understand preferences for emerging technology and innovation in the financial industry.

Recruiting for this sample was based on 2010 U.S. Census data for region, sex, household income, and age via Cint. The survey was only offered in English, and it was executed on March 31 and May 13, 2020.

i International Monetary Fund, “Finance & Development, Vol. 57, No. 1,” March 2020, retrieved from imf-launches-world-uncertainty-index-wui-furceri.htm

ii NPR, “A Staggering Toll: 30 Million have Filed for Unemployment,” April 30, 2020. Retrieved from

updates/2020/04/30/848021681/a-staggering-toll-30-million-have-filed-for- unemployment

iii U.S. adults' concern about job loss or pay cut from COVID-19 May 2020," May 15, 2020. Retrieved from

iv, “Dow Jones -10 Year Daily Chart,” April 26, 2020. Retrieved from

v Statista, “Fears of Personal Financial Impacts of Coronavirus by Country 2020,” April 2, 2020. Retrieved from financial-impact-from-coronavirus-worries-worldwide-by-country/

vi Bloomberg News, “A Global Consumer Default Wave Is Just Getting Started,” March 30, 2020. Retrieved from articles/2020-03-29/a-global-consumer-default-wave-is-just-getting-started-in-china vii Small Business Administration, 2018 Small Business Profile. Retrieved from Profiles-US.pdf.

viii National Bureau of Economic Research, US Business Cycle Expansions and Contractions. Retrieved from

ix US Bureau of Labor Statistics, The Recession of 2007-2009. Retrieved from

Steve Holdych

Steve Holdych


Steve supports CapTech's growth in an executive leadership capacity. He brings a unique blend of business development and technology expertise to our clients.

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Bree Basham

Bree Basham

Principal, Customer Experience

Bree leads our Customer Experience practice, creating digital strategies and solutions using modern technologies to deliver meaningful and measurable experiences for our customers. She has served as a Creative Director for many omnichannel experiences within the retail space, as well as for a number of other industries that CapTech serves.

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