COVID-19 has seen consumers across the world ditch cash and in-person shopping in favour of online spending, according to Standard Chartered’s latest global survey.
Almost two-thirds of survey respondents (64 per cent) agree that COVID-19 has made them more positive about online shopping, but they are also more careful with their spending and want new ways to track their money digitally.
The study of 12,000 adults across 12 markets of Hong Kong, India, Indonesia, Kenya, Mainland China, Malaysia, Pakistan, Singapore, Taiwan, UAE, the UK and the US is the second in a three-part series, looking at how COVID-19 has transformed consumers’ way of life, and what changes could be here to stay. While the first survey focused on the pandemic’s impact on earnings, the second offers new insights into the way the global health crisis is changing consumer spending habits.
Before the pandemic, two-thirds of survey respondents said they preferred to shop in-person compared to only one-third online. This dynamic has shifted significantly with almost half (48 per cent) preferring online payments to in-person card or cash payments. This increase in preference for online payments is true across a range of purchases, from groceries and travel to digital devices. As a result, almost two-thirds (64 per cent) globally now expect their country to go fully cashless, with almost half (44 per cent) expecting this to happen by 2030.
Respondents in all 12 markets anticipate doing more of their shopping online from now on, with people in Kenya foreseeing a 30 per cent increase in their online spending, those in the UAE thinking it will increase by 18 per cent and those in Indonesia by 16 per cent. While still anticipating an overall increase, respondents in the UK, Mainland China, the US and Taiwan believe their online spending will only grow by less than 10 per cent in the future.
The survey results are supported by Standard Chartered’s ATM withdrawals data. Across the ten surveyed markets where Standard Chartered offers retail banking (all except the UK and US), COVID-19 has dramatically accelerated the decline in ATM usage. Cash withdrawals from ATMs are now half what they were two years ago.
Meanwhile, as spending begins to creep up with lockdowns easing globally 46 per cent reported increased spending in July three quarters of people say the pandemic has made them more careful with their expenditure. This point was more evident in the responses of Millennials and Generation Z (78 per cent of 18 to 44-year olds) than those over 45 (65 per cent).
Reflecting this increased caution, 62 per cent of survey respondents said that the economic impact of COVID-19 has made them more likely to track their spending, with over three-quarters either using or wanting to use budgeting tools or tools that block card-spend over specified limits.
Consumers are now spending more on basics – such as groceries and healthcare – and digital devices than they did prior to the pandemic, and they expect this increase to continue in the future. Meanwhile, 64 per cent of people say they have spent less on travel/holidays than they did before the pandemic, while 41 per cent have spent less on experiences and 55 per cent have spent less on clothes.
This trend is expected to continue with 38 per cent saying they anticipate spending less on travel/holidays, 24 per cent on experiences and 30 per cent on clothes in the future.
As well as being increasingly careful with their spending, consumers are becoming more conscientious. This is good news for small businesses and those producing locally made goods, particularly those making and selling sustainably sourced products. More than half of people say they are now more likely to shop locally (57 per cent), more sustainably (52 per cent) and with small businesses (50 per cent). This is particularly true of younger generations (18-44), suggesting this trend is likely to continue.
Aalishaan Zaidi, Global Head, Client Experience, Channels and Digital Banking at Standard Chartered, said: “In a world where people are being more cautious with their spending, being able to keep track of where your money goes has never been so important. One way to do that is to keep your payments digital and our own data supports this shift with cash withdrawals from ATMs declining to half the levels they were two years ago as online payments have increased.”
He added: “But there is more banks can do to help. With three-quarters of people either using or wanting to use budgeting of financial control tools, it’s imperative that banks continue to innovate digitally so that clients can easily transact, track and manage their spending in a safe and secure way.”