The Coronavirus’ Effect on the Banking, Mortgages & Credit Industry

The economic and health uncertainties caused by the Coronavirus led businesses and consumers alike to curtail spending and, where possible, increase savings. Consumers paid down debt on their credit card accounts at a record rate. By 2022, consumers had returned to higher levels of spending, increased credit card debt and lower savings rates.

Technologies that enable both businesses and consumers to make touchless payments and online payments boomed at incredible rates—boosting payment platforms like PayPal, Venmo and Zelle. Consumers quickly replaced much of their physical, in-store shopping with online shopping. Many shopping platforms with integrated payment tools, such as Shopify, saw terrific growth rates.

The Coronavirus initiated trends in banking and payments that will have lasting effects. This is true on a global basis. A good way to think of the total effect is that the Coronavirus accelerated what would have been years’ worth of growth in digital behavior into a few months’ time.

= The mortgage industry boomed as people working from home looked to move into a home with more space (or in less populated cities)—as a result, home sales and related borrowing soared. At the same time, extremely low interest rates led millions of people to refinance their existing mortgages. By 2022, interest rates were much higher, and mortgage applications plummeted.

= Online banking rose dramatically, as did online applications for credit, including mortgages.

= The use of cash declined.

= Banks closed many branch locations, with branch traffic falling while the use of online banking increased.

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The Coronavirus’ Effect on the Banking, Mortgages & Credit Industry, Business and Industry Trends Analysis

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