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impacts of coronavirus on technology, marketing, and the digital economy
here.The US personal savings rate (personal saving as a percentage of
disposable personal income) increased to 13.1% in March, up from 8% in
February, according a study from the Bureau of Economic Analysis (BEA).
Consumers put $2.17 trillion into savings, marking the highest rate
since 1981.To get more news about
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Spending fell 7.5% in March, as consumers “canceled, restricted, or
redirected their spending,” per BEA, due to social distancing measures
related to the coronavirus pandemic. The personal savings rate has been
rising the past couple of years as people likely anticipated a recession
— and this rate will likely increase further as consumers continue to
social distance and receive their stimulus checks. This shift in
consumer spending and saving patterns gives banks and neobanks alike the
opportunity to highlight their savings accounts and tools.Neobanks can
aggressively market their high-yield savings accounts. In recent years,
lowering interest rates have contributed to consumer dissatisfaction
with savings accounts from incumbent banks. Digital-only banks have
stepped in to fill the gap, and high-yield savings accounts are now one
of their main selling points: For example, compared with the national
average of 0.07% annual percentage yield (APY), Goldman Sachs'
digital-only offshoot Marcus offers a savings accounts with a 1.55% APY,
and neobanks like Chime and N26 offer above-average APYs too.Though the
Fed slashing interest rates to zero toward the start of the coronavirus
crisis took some wind out of their sails in terms of the APYs they're
offering, neobanks should still look to increase awareness of their
high-yield savings account offerings. Some consumers may be looking for
ways to maximize their newfound savings, and promoting the benefits of
their offerings via marketing campaigns could pay off for neobanks in
increased signups and deposits — especially if continued social
distancing means that consumers will continue saving more.Big banks can
introduce customers to their personal finance management (PFM) features.
With savings on the rise, there could be an increased appetite among
consumers for tools that help them manage their money and put their
savings to good use. Consumers largely want these tools through their
banking channels: Over 75% of respondents to an RFi study said they
would prefer to use PFM tools from their primary financial services
provider — typically a bank — while just 6% said they'd prefer PFM tools
from fintechs or neobanks.This makes it an ideal time for banks to
increase awareness around their available tools, such as by prompting
customers with the tools when they get a deposit or move money into
savings. By increasing adoption of these tools, banks could encourage
the formation of savings habits that will last beyond the current
crisis: Chase, for example, offers Autosave, a digital feature that
allows customers to set a savings goal as well as the frequency and
amount they'd like to contribute to that goal. Banks should streamline
their digital account opening processes in response to the higher
personal savings rate. As consumers shelter in place and banks close
branches or modify hours, the majority of banking services are being
offered remotely, which means consumers looking to open a new savings
account likely must do so digitally.Even prior to the pandemic, digital
account opening was in demand: 58% of mobile banking users who responded
to Business Insider Intelligence's US Mobile Banking Competitive Edge
Study 2019 (enterprise only) called the ability to open a new savings
account in a mobile banking app “extremely” or “very” valuable. Chase,
for example, saw over 2 million accounts opened digitally in 2019, and
that number could be higher this year.To avoid discouraging any customer
who is interested in opening a savings account during this time, banks
should ensure that digital account opening processes are available,
reliable, and easy to use — otherwise they could miss out on a potential
silver lining of the coronavirus crisis.
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