From a striking rise in ecommerce transactions, to an increase in the adoption of mobile banking, the COVID-19 pandemic has been a catalyst for change and digitisation across a multitude of sectors
Retailers have embraced ecommerce to protect revenues, banks have focused on strengthening their digital offerings and agile fintech players – and the fintech ecosystem as a whole – has been on hand to help support society’s wider shift towards cashless payments.
However, challenged by repeated global lockdowns and rapidly changing restrictions, the travel industry has been slower to adapt and re-open. As mass immunisation and talk around vaccine passports unlock the doors to international travel post lockdown, however, it’s imperative that banks, financial services providers and travel brands understand how the pandemic has accelerated shifts in the ways people manage and spend their money.
Only by understanding these changes will they be able to deliver better, more efficient financial services for travellers that are readily embracing a digital-first mind-set. In a society vastly changed by the COVID pandemic, borderless payments and digital services such as mobile FX and multi-currency wallets will play a vital role in capturing consumers’ pent-up demand for travel.
COVID-19 and the domestic shift to cashless
Social distancing measures and local lockdowns have driven a significant rise in digital-first behaviours across the finance and payments spaces; 76% of the UK’s population now uses an online banking app, compared to 55% just five years ago, and 66% of people plan to use more contactless solutions moving forward. Contactless transactions reached their peak in December 2020 at 900 million, totaling £12 billion in revenue and representing a 65% YoY increase.
This widespread move to digital has transformed customers’ expectations of how they should be able to spend, save and manage their finances. Consumers expect their providers to deliver responsive mobile platforms to manage their money, where payments and transactions can be made instantly from their smartphone.
Likewise at point of sale, contactless and card-based options have become commonplace, with 80% of consumers saying they prefer card payments over cash. As consumers have so readily adopted the speed and convenience of digital payments when spending domestically, it stands to reason that these expectations will remain as international travel resumes.
The rise of mobile ticketing
As spaces such as retail and finance have seen accelerated shifts towards digital, travel providers have too – and they’ve had to adapt to survive. Digital ticketing solutions and contactless payments have long been available on most forms of public transport, from local bus operators to international airlines. Spurred on by travel guidelines and consumer fears around public transport, however, operators have had to champion these options over traditional cash payments to restore consumer confidence and decrease the risk of transmission.
With consumers embracing digital payment and ticketing options on a micro scale, for example on their local bus or tram, we’re also likely to see these shifts take hold on a more global level. Research from the World Travel & Tourism Council, for example, shows that nearly half of consumers (45%) would prefer a digital passport over their current physical document. Governments are already in the process of responding to this change, with the EU announcing its plans to implement a digital ID ‘wallet’ by October 2022. The widespread adoption of ‘vaccine passports’ by governments around the globe will also further drive the move towards digital identification.
Workcations; blurring the lines of consumer travel
Society’s move towards flexible and remote working setups will also accelerate changes in how consumers plan, book and take holidays. With 33% of workers now expecting to work remotely between one and five days a week, employers are fast having to adapt to the concept of the ‘borderless office’. The ability to work remotely from anywhere has given rise to the ‘workcation’, where travelers will either work remotely from their accommodation or tag additional leisure days onto their business trips.
This change can already be seen in travellers’ booking habits, with statistics indicating that the length of stays in hotels has increased from 3.5 to 9.5 days on average. Travellers are also booking trips more spontaneously; the average time from booking to check-in has dropped by 38% in the past 12 months.
The trend towards remote work holidays is increasingly rapidly, and the travel industry is already responding with accommodation and packages that offer luxurious working spaces, reliable internet connections and conferencing facilities. In a world where people can travel and work from anywhere, banks and financial services providers will have to offer a borderless payments services to meet the needs of increasingly international customers.
The question of cash
Understanding wider societal trends in how and where consumers work, as well as their increasingly digital relationship with their finances, will be vital for financial services providers to offer market-leading cross border payment services. Despite society’s move towards card-based solutions, cash still remains the dominant go-to payment method globally, with an estimated $18 trillion[i] being spent in cash last year.
When it comes to currency exchange, however, the traditional cash-based model is both time consuming and expensive for those traveling abroad. Studies suggest that travellers from the UK can have as much as £90 in spare currency following a holiday, collectively meaning that they could be sitting on over £3.5 billion of spare change. Many consumers will eschew the traditional method of converting currency for smaller amounts, leading to frivolous airport spending to reduce ‘wasted’ currency.
By offering a robust mobile wallet solution, banks can save their customers time and inconvenience and can also actively help them manage their holiday spending and currency conversion more efficiently and affordably.
The mobile-first future of travel payments
From remote working to contactless payments, it’s undoubtable that the COVID pandemic has driven major shifts in how we live, work and travel, and by tapping into society’s increasingly digital first behaviours, businesses will be able to offer consumers better financial services while capitalising on demand and opening new revenue streams.
Mobile FX and multi-currency wallets could well reflect the future of cross-border payments. These services offer myriad benefits for consumers, from the ability to buy, sell and store multiple currencies digitally, to the real-time view of spending patterns and conversion rates, all from their smart device. Where the smartphone becomes the natural touchpoint for all a traveller’s needs, from navigation and translation through to entertainment, so too will banking and financial services ‘on-the-go’ become commonplace when travelling abroad.
Creating a mobile FX offering will allow businesses to empower their customers to manage their spending on abroad and will also expose a revenue stream in the form of competitive conversion rates. Figures also indicate that financial services providers with a multi-currency platform see more widespread domestic usage; 80%[ii] of card holders who use their digital bank card abroad are more likely to use it when spending domestically, with a 38%[iii] increase in spending on average.
The passport to post-COVID travel
COVID-19 has disrupted consumers’ relationships with their finances in a wide range of ways, and the travel industry won’t be immune to the widespread digital adoption the pandemic has helped accelerate. By investing in mobile FX and ewallet services, banks can help their customers to better manage their money abroad and deliver solutions that meet the needs of consumers for which work, travel and leisure are no longer mutually exclusive. Forming the right partnerships to do so will help financial services providers deliver mobile FX products affordably and at scale, deepening their relationships with their existing customers and unlocking new potential avenues for revenue generation.
Being agile enough to tap into this growing market appetite as the travel sector re-opens will be a case of forming partnerships with the right specialists. Global Processing Services award winning, trusted, flexible and configurable platform has already enabled over 180 customers, including the likes of Revolut, Starling and Curve, to tap into growing next generation payment segments. Building partnerships with cross-border transaction experts, such as Currencycloud, allows us to offer a full stack platform incorporating both mobile FX and point of sale (POS) FX, enabling you to provide the experiences travellers expect in a post-Covid world. The ability to support FX transactions at weekends, exchange rate displays at POS systems and ewallets that support multiple currencies, allows globe-trotting travellers to budget their trips more effectively, supported by a direct settlement system that significantly speeds up transactions, avoids complexity and reduces costs.
Discover more about the Global Processing Services’ partnership with Currencycloud, which delivers a complete, enterprise-grade, cross-border payments solution here.
[i] Visa Forum 2021
[ii] VisaNet 2019
[iii] VisaNet 2019