How Has the Pandemic Permanently Reshaped the Payments Experience and Consumer Behavior in the U.S.?

Sumit Arora, Head of Payments Ecosystem Enablement, Wells Fargo

During the pandemic, the payments industry in the U.S. was tested like never before. Consumers were forced to shop and pay differently, and businesses were forced to find new ways of transacting. As a result, the demand for digital and convenient payment solutions soared. Research shows that in 2021, 74% of consumers used a P2P (peer-to-peer) instant payment service, up from 67% prior to the pandemic1. To address the rapidly evolving ecosystem, financial institutions fast-tracked their plans for digital transformation and customers responded with an ever-increasing appetite for payments innovation. 

Digital transformation for payments means digitization. Fortunately, the world of payments was already moving in the direction of digitization before the pandemic through the creation of new solutions that expanded the digital payments ecosystem.  When the pandemic infused pressure on the industry, payments innovation went into hyper drive, and consumers progressively explored digital payments offerings. At the onset of Covid-19, U.S. financial institutions responded quickly to meet new customer demands for digitization. Examples of the accelerated adoption of digital innovation include the proliferation of instant payment solutions, digital assets (including crypto currencies), and POS touchless payments to name a few.

Post-pandemic experiences are instant, seamless, secure, and contactless

  • 45% of consumers said they’ve taken advantage of a fast money movement service in 2021. 2
  • 92% of small businesses with physical locations accepted mobile and contactless payments in 2021, up from 67% in 2019. 3
  • As of May 2022, more than 200 financial institutions are integrated into the RTP® network from The Clearing House.
  • Non-banks are racing to own the financial experience.
  • Embedded finance and open banking entities are offering payment services to non-banks.
  • Distributed Ledger Technology is being used to create digital assets (e.g., cryptocurrencies, stablecoins, Central Bank Digital Currencies around the world) and the Federal Reserve is exploring the development of a U.S. digital dollar.
An increase in digital banking, driven by changes in customer behavior due to the pandemic, requires financial institutions to think differently about payments offerings. Almost overnight, people who were used to going into a branch for sending wire transfers or for making a down payment on a house, moved to completing these transactions digitally. Personal touchpoints remain key to maintaining trusted relationships with customers, whether on-location, through video conferencing or in an undiscovered corner of the metaverse. While digitization has become core to the payments industry, it is essential to maintain a balance that remembers the human element of banking.

Financial institutions are bringing together the best of both worlds in payments and technology in response to redefined consumer behavior and expectations

The pandemic positioned financial institutions for a future that brings together the best of both worlds in payments and technology. In a post pandemic world, fintechs and banks have seized the opportunity to form a more collaborative relationship. These partnerships expedite the development of innovative products and services for banking customers. One example of collaboration with fintechs is the implementation of application programming interfaces (APIs) that enable customer-permissioned data sharing.

The desire to innovate quickly is balanced by the enduring fiscal responsibility financial institutions have to businesses and consumers. Large financial institutions remain cautious when offering a new technology solution at scale to millions of consumers. Despite moving forward with caution, banks recognize that falling behind the tech curve in delivering on the convenience consumers demand will mean losing customers in the long run. So, along with fintech and big tech partnerships, financial institutions are independently expanding their digital offerings through enhancing and developing proprietary tools that enable more streamlined digital transactions.

Ultimately, the prevailing industry view of building relationships between fintech and banking is not one of competitiveness — rather, an opportunity to leverage the data and scale of banks with the nimbleness and innovation of fintech firms for creating an elevated customer experience.

Banks are demonstrating commitment to drive continued modernization and innovation in payments

Payments modernization is an ongoing journey that will continue to evolve in line with technology and changing customer demands. No matter the modality, financial institutions have proven their commitment to meeting customers’ needs and will continue to have a pivotal role in the payments ecosystem, crisis or no crisis. That said, while banks are focused on creating more and more digital, mobile-first experiences, the industry acknowledges there is still a pocket of the population who prefers to bank in person. Therefore, while the digital and virtual experience keeps growing, we will continue to see a blend of digital and physical banking in the near to medium term for payments experiences.


1. Mercator Advisory Group. U.S. North American Payments Insights (2020 and 2021) and Buyer Payments Insights  (2019).
2. Mercator Advisory Group.  U.S. North American Payments Insights (2021).
3. Mercator Advisory Group.  U.S. Small Business Payments Insights (2019 and 2021).

Go Back