Lasting Changes to the Financial Industry from COVID-19

By Gabriel Ruzin

The COVID-19 pandemic has severely unsettled consumer lending to such an extent that some methods and facets of the industry may never revert to pre-pandemic life, according to the latest annual J.D. Power Consumer Satisfaction Survey released on May 26, 2021. While many of these changes have left lenders and servicers scrambling to keep up with lending’s ever-evolving landscape, some side effects of the pandemic may actually be an unforeseen boon to a business that some have seen as technologically stagnant for decades.

While the survey found customer satisfaction levels to be slightly depressed across the board, as lenders contended with pivoting a ‘smile and a handshake’ industry into one where loans can be handled from start to finish in front of a computer screen, it also noted that the importance of said computing access, especially mobile applications, is more critical to customers across all age spectrums than ever before. With this relatively new emphasis placed on technology, marketers flooded online spaces with advertising during the pandemic at an unprecedented rate. In 2020, 74% of all American financial advisors onboarded new clients and 55% of those advisors said they had increased their level of marketing over social media. As a matter of necessity, when in-person meetings were not feasible during the pandemic, social media is how those in the financial industry maintained their current relationships - and created new relationships - during a period of extreme uncertainty. Perhaps most notably, 84% of financial advisors indicate that they expect this new focus on social media communication would continue after the pandemic’s conclusion.

Furthermore, studies during the ‘Age of COVID’ show that current and prospective customers are currently far more amenable to using, communicating, and doing business through social media than at any time since its onset. Since the pandemic’s outbreak, online shopping has risen by 15%, social media usage surged by as much as 51%, readership of financial news and articles increased by 27%, and (most conspicuously to servicers) the number of online users engaging with advertisements rose by 15%. As ‘traditional’ lending methods saw turn times and, in turn, customer satisfaction levels slide during the pandemic, those servicers willing to utilize technological advances have worked to bring their customer base along with nary a bump in the road.

As with many other servicing industries, the lending industry depends not only on keeping consumers happy and keeping technological innovations as a focal point in company strategy. If the numbers are to be believed, the COVID-19 pandemic appears to have permanently proven to lenders the importance of using technology and social media to create an easily-navigable, pleasant, and successful marketplace for consumers that is here to stay.