How has COVID-19 affected financial habits across Europe?
A new YouGov webinar used research from across 17 global markets to answer this question. Hosted by Matt Palframan, Director of Financial Services Research, the session explored the findings of a recent white paper – including the broad impact of the pandemic on consumer behaviour, adoption of digital technology and fintech, ethical issues in banking, and priorities for 2021 and beyond.
Impact of COVID-19 on consumer behaviour
The session began by exploring how the pandemic affected spending habits across the world – revealing that, across Britain and Europe, two in five (41%) had cut back on non-essential spending, and two-thirds (65%) intended to do so in future.
On a national level, French consumers were most likely to say they had saved more money over the course of the crisis (36%), while the Polish public were least likely to say they had done so (19%) – and most likely to say they had borrowed funds (16%). Meanwhile, a third of Spanish consumers (32%) and three in ten Italians (30%) say they’ve dipped into their savings as a result of the pandemic.
Adoption of digital channels
The session then focused on consumer attitudes towards digital transformation in financial services. The data showed that, in every European market except Denmark, a majority said they would use mobile banking, online loan applications, or other digitised financial services “wherever possible”. In Poland, this rose to as many as three-quarters of consumers (78%).
More specifically, the research shows that European consumers increasingly prefer contactless payments to cash payments. In Poland, just one in ten favour hard currency (10%), while 44% use contactless payments wherever they can. It’s a similar story in most markets, with the notable exception of Germany, where just one in five say they prefer contactless (19%) and a quarter prefer cash (24%).
In Britain, consumer spending – as of December 2020 – leans decisively towards the digital realm. Half of consumers say they do most or all of their purchases online (50%), while just 17% say they do most or all of their purchases offline. One in ten (9%) are evenly split between the two.
Fintech challengers
The webinar highlighted that the pandemic may have slowed the progress of some fintech “challenger” banks. In Britain, Monzo was enjoying an upward trajectory – rising from a Consideration score of 2.8 at the beginning of 2019 to 5.7 by the end of the year (Consideration measures the proportion of the public who would consider a brand when they are next in the market for a financial service). As of March 2021, however, it appears to have stalled – rising to just 6.2 since then.
The data showed that British consumers are not necessarily poorly disposed towards their bank. While 15% say they hate it, three in ten (29%) say they love their bank – and while 13% would not recommend their financial services provider to a friend or family, half (51%) would. Complicating things further, 68% trust their current bank – while just 17% think challenger brands are reliable and trustworthy – and while 11% say they would prefer a fintech bank, 47% say they would favour a traditional institution.
COVID-19 has made people less likely to use newer, less-tested brands. Two-thirds of British consumers (64%) say they will only use established and recognised providers as a result of coronavirus.
Facing the financial future
The end of the session focused on the future – most importantly, the financial priorities consumers have for 2021. On a global level, the main lesson of the pandemic seems to be “expect the unexpected”: 45% of consumers say they plan to save up for an unknown hardship.
This is still an important factor in Europe – with Polish consumers most likely to say they are preparing for unexpected difficulties (48%), and Danes least likely (20%). But overall, the continent’s consumers are most likely to focus on ensuring regular financial commitments are met: in Spain, over half of the public say they’re trying to make sure they can pay their bills (55%), and nearly half of Brits (49%) and Swedish consumers (47%) say the same. Saving for retirement appears to be the lowest priority: ranging from 8% of Swedish consumers at the lower end to 16% of Germans at the upper end of the scale.
