Coronavirus: What It Means for Banks and Personal Finance As We Move On

• Author: Jeffrey Simmons
• Posted: 2024-10-20

With countless canceled events, empty stadiums, and less people going to brick-and-mortar businesses, banks have been hit pretty hard by COVID-19. While there's no doubt that, as a society, we will make it past this horrible event, many are wondering what will happen to the brick-and-mortar banks and credit unions they go to for daily business. There's no guarantee, but here's what will most likely happen to these institutions once this crisis has passed us by.

Going Fully Digital

Some banks and credit unions had been holding off on going "all the way" in digital technologies due to fears about lack of security. However, these same banks haven't really had a choice in the face of Coronavirus. They could either cause a panic by making consumers come in to get their cash, or they could implement digital technology.

If your bank or credit union hadn't adopted digital technologies like check cashing by mobile app, chances are they've been adopted by now. This is only common sense for a growing population with increasing demand. However, Coronavirus helped spur this growth from a "nice to have" to a complete necessity for banks and credit unions that want to stay in business.

A Shift to Cryptocurrencies

The last thing that most banks want, a shift to cryptocurrency appears to be inevitable. This means that technologies like Bitcoin will begin to reign supreme over the traditional dollar. This shift is because Bitcoin does not suffer as much as traditional currencies when there are crises like this.

In addition, tools that actually help earn the most money in the traditional system are usually reserved only for wealthy investment bankers. This exclusive toolset is not available to most of the population. If Bitcoin management becomes popular, mobile app management would likely become the most-utilized form of it. This would completely remove banks and credit unions from the process. It would also likely increase the already very high value of each Bitcoin.

Of course, there are thousands of other cryptocurrencies. While not all of them will take off, there are tens of them that are accepted at retailers and online stores. This number will likely continue to grow, as cryptocurrencies that can still be "mined" at home (effectively trading the cost of electricity for money) will be tradeable and accepted at many places.

A Push from Tech Companies Away from Banks

Many tech companies, like Twitter and Facebook, own separate startups that focus on Bitcoin management. They have been waiting for years for a "told you so!" financial moment, such as the destabilization of currency after coronavirus hit the world hard. They likely hope that this will spur younger consumers to choose their increasingly easy to use cryptocurrency tools in lieu of traditional banking tools.

While older generations are the most likely to continue using old-fashioned banks and credit unions, younger generations who are more financially pessimistic will likely be interested in online alternatives. Especially the anonymity factor of Bitcoin and other cryptocurrencies is being used to these companies' advantage. While the IRS claims that these currencies are taxable, many people simply don't file tax returns on them and suffer no consequences. Note that this is actually illegal, known as "tax evasion", although that doesn't seem to be stopping many people from doing so.

These tech companies are already beginning to push their own proprietary cryptocurrency management systems, as they get a tiny cut from each transaction. This is very similar to how existing credit cards work, except for that the consumer has to actually have the cryptocurrency in his or her "wallet" before a transaction can take place. In other words, it's somewhat like going back to the basics and only allowing consumers to use debit cards to make purchases. If such a system becomes widespread, we could see consumer debt fall from its current level as people begin to live more and more within their means.

Will My Bank Survive?

Chances are that major banking institutions and credit unions will continue to do just fine. While Bitcoin wallets are becoming more popular, they don't, at the moment, have the power to grant mortgages and do other important things that only banks and credit unions can do. For now, older generations will also keep them running.

However, to keep the current younger audience they have, banks will need to start pumping out more digital offerings to keep their clientele.