How COVID-19 is going to change Pakistan’s relationship with money forever

The COVID-19 pandemic has disrupted almost every industry we know and the pace with which it has rendered older systems of doing commerce is unprecedented. No one knows how or when this will end but the post-corona world will for sure be radically different than that of 2019.

In 2002, SARS spurred digitisation in China

We do have some historical trends from China’s transformation following the SARS outbreak from 2002. As lockdowns were imposed, the respiratory virus (similar to COVID-19) created major roadblocks for the Chinese economy. AliBaba, a young company at the time, was faced with major existential issues and not many would have bet on its survival. In the book “Alibaba: The House That Jack Ma Built,” author Duncan Clark writes that the SARS outbreak “came to represent the turning point when the Internet emerged as a truly mass medium in China.” Ma’s team dug deep, worked from home for 12 hour shifts and built the foundation for a truly digital commerce experience. Now, AliBaba is valued at roughly $500 billion; one of the largest corporations of the world.

To try and speculate what this would mean for Pakistan’s arguably outdated ways of managing money, SadaPay hosted a webinar with prominent change leaders who have been pushing for a digital revolution long before this pandemic came along. Abdul Rahim (CTO & CISO at Securities and Exchange Commission of Pakistan) and Atyab Tahir (Country Manager Pakistan at MasterCard) were hosted by Brandon Timinsky (CEO at SadaPay) and Omer Salimullah (COO at SadaPay) to discuss what the future holds for the financial services industry in Pakistan.

While this transition will require adaptation and careful handling from finance companies as they seek to reassure consumers, respond to their concerns, and earn their trust during this volatile period — a lot may depend on just how well companies’ digital infrastructure and services can adapt to the new mindsets, habits and logistics. As with any significant market pullback, opportunities will eventually arise amid the disruption. Let’s take a closer look at how our experts foresee money management behaviours changing in Pakistan:

Acceleration of digital financial services

Digital banking is expected to be at the forefront of the post-COVID 19 world. Allowing for the delivery of financial services at a minimum cost, digital banking not only acts as an easy and convenient service for those already holding bank accounts, but it is also a powerful tool in the financial inclusion of a country – helping those from lower socioeconomic backgrounds access financial services through only a smartphone. This is particularly important in a country like Pakistan, where a vast majority of the population lives in poverty.

Avoid cash at all costs

The idea that cash will eventually subside with the rise of cards, mobile payments and e-commerce has been around for decades, but the coronavirus pandemic may have changed public perception of cash forever. Cash has long been a spreader of bacteria and germs and in the hand washing and sanitising corona world, it’s likely that there would be increased fear and anxiety around its use. Additionally, the call for indefinite social distancing has increased the need for digital payments around the world, rendering cash more and more unnecessary in a post-COVID society.

Spend less, save more — systematically

The economic downturn is going to have a trickle down effect on the spending of all kinds. Essentials will make up the majority of the consumer spending and people are going to save up for the upcoming periods of uncertainty. We will see an increase in the usage of budgeting tools and apps so expenses are tracked as individuals try to stay on top of their budgets.

Complexity to be taken out from digital payments — think WhatsApp vs Fax

In today’s fast moving digital world, it’s imperative for companies to respond quickly and efficiently to the needs of their customers. Further, it’s also important for companies that specialise in digital payments to ensure that their services are user-friendly enough to be adaptable to a variety of age groups for daily use.

Physical merchants becoming more open to new payment methods

With the advent of the coronavirus, physical merchants will need to learn to become adaptable to digital methods. The psychological effects of COVID are likely to stay long after the virus itself, meaning that in-person transactions will likely stay in decline. For this reason, more and more physical merchants will be forced to shift their businesses online and digital payments will rise at an unprecedented pace.