Steve supports CapTech's growth in an executive leadership capacity. He brings a unique blend of business development and technology expertise to our clients.
Your web browser is out of date. Update your browser for more security, speed and the best experience on this site.Update your browser
Articles | June 10, 2020
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: 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.