How COVID Is Forcing Financial Services Companies To Adapt

The COVID-19 pandemic has exacerbated the financial gap among Americans, forcing the most vulnerable into a more precarious situation while allowing the wealthiest to even prosper.

But if there’s a silver lining to that development, it’s that the widening gap has also forced financial services companies to reckon with the fact that they need to do more to reach the hardest-hit consumers.

That’s the crux of a conversation with Even Financial Founder & CEO Phillip Rosen and TransUnion SVP, Chief Product Officer Hilary Chidi.

Different Americas

According to a TransUnion hardship study, 52% of Americans have been financially impacted by the pandemic, such as loss of income and increased expenses for childcare.

“The impact is significant. These are families that are desperately trying to make sure that they can continue to make ends meet,” Chidi said.

This increased hardship is manifesting itself in several ways, but the main result is an increased reliance on credit.

“There are a couple of different Americas,” said Rosen. “Certainly if you are a homeowner and you’re in good shape right now, there are very low-interest rates out there to take advantage of. So they’re looking to the credit markets to actually improve their financial wellbeing. But that’s not the majority of people. The majority of people have been impacted negatively, and they’re looking to credit products to stay afloat.”

How Financial Services Are Evolving

Just like the last financial crisis brought about a number of new kinds of financial services, this crisis is causing financial services companies to reassess how they target consumers. TransUnion, for example, recently integrated some of Even’s financial APIs onto its site to offer more personalized offerings.

“When you’re shopping to travel someplace, are you going to compare Delta Air Lines DAL to American Airlines AAL to Southwest Airlines LUV based on their brands? Or are you going to do it on how they’re pricing the specific place you want to go to and based on the kind of experience they can deliver to get you there? Those are two different modes of shopping.

“But financial services required a level of personalization well beyond just shopping on a site. Which is a very big difference for financial service products in both credit and insurance. Not everybody can buy what they want to buy.”

Hope For The Future

Looking beyond the pandemic, both Chidi and Rosen are hopeful that the forced increased digitization of financial services will end up being a net positive for consumers in the long term.

“I’m encouraged and hopeful that as we go through this pandemic and come out of it, the move towards digitization will accelerate, for the most part, access to financial services in a way that we haven’t had in the past,” Chidi said.

“As things become more digitized...we’re able to bring to market more products that will help with savings and building credit and education,” Rosen added.

Watch the full interview below.