Contactless financial services and digitalization will be an inevitable trend for banks and other financial institutions in the post-COVID period.

The pandemic has posed a significant challenge to the financial services sector as it often involves face-to-face interactions. The efforts of some financial institutions to develop online and remote services and invest in financial technologies, or fintech, have proved effective, with their value well recognized.

Financial institutions that already had online service capabilities were able to quickly provide non-contact services during the pandemic and many have seen significant growth in online transactions.

For instance, Ping An Bank’s local branch in Wuhan, the first epicenter of COVID-19, reported an improved performance despite the pandemic’s negative impact on its operations, thanks to its trials in online customer acquisition and use of artificial intelligence in activating dormant clients.

Its balance of assets and liabilities under management in the retail business surpassed 50 billion yuan ($7.29 billion) and 30 billion yuan respectively in February.

However, financial institutions that relied heavily on offline services experienced stagnation in business segments like credit and wealth management, where employees were unable to return to their workplace.

The pandemic increased awareness of digital transformation and fintech among financial institutions. Those who have not yet embraced digitalization need to cooperate with technology companies to catch up or else they may lag further.

Authorities also released policies to encourage financial institutions to expand contactless services. Five key financial institutions, including the People’s Bank of China, the central bank, released a document on Feb 1, asking consumer-facing providers of financial services to enhance online services nationwide, especially in regions hard-hit by the virus, and to persuade companies and residents to turn to the internet and apps to carry out finance-related business.

On Feb 14, the China Banking and Insurance Regulatory Commission said banks and insurers need to expand their online businesses, improve management and guarantee of electronic channels such as internet banks, mobile banks and mini programs, in order to provide safe, convenient and various contactless financial services.

It is conceivable banks will accelerate research and application of fintech once the COVID-19 pandemic subsides. According to a joint survey by the China Banking Association and the Asset Management Association of China, 68 percent of interviewees agreed financial institutions’ demand and usage of fintech have obviously increased. And 54 percent of the respondents involved in the finance sector said they planned to increase investment in fintech after the pandemic.

Financial institutions’ growing need for lowering costs and risks can also be met by enhanced digitalization. Compared with overseas institutions such as Citibank and Wells Fargo that invest over 10 percent of annual revenue in technology, Chinese financial institutions’ input is low. The major five banks in China invest about 2 percent of revenue in technology upgrades every year. The corresponding figure for many small and medium-sized banks is less than 1 percent. But it’s good to see that both large State-owned banks and rural banks are making efforts to develop fintech.

Non-contact financial services involve intelligent marketing, risk control, products, day-to-day operations and office work, to ensure banking-related business continues without any disruption even during extraordinary periods like the epidemic.

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