COVID-19 & The Financial Sector

Businesses have been hit in various ways during the pandemic, many have had to halt proceedings altogether, while others have managed to function relatively unscathed by COVID-19. One industry that has shown a strong demand during this time is the financial world.

A recent study took a look into how the financial sector has grown during 2020, you can see the full results here: https://www.awaken.io/blog/boom-or-bust. Despite the world having to close their doors to customers and clients, money and finances are always moving and even with a pandemic to deal with, businesses and individuals still require professionals to help them with their cash, whether this be helping with money worries or providing advice to those who are flourishing.

We take a deeper look into the findings of the study and how the financial sector has grown or shrunk in the US and UK during 2020.

Insurance

Despite most businesses now wanting to insure themselves against pandemics and providers removing this cover from new policies, there are other elements of the financial sector that are in demand during this time.

Travel insurance companies saw a surge with customers checking policies and requiring financial reimbursement for increasing numbers of canceled holidays, while others wanted to increase medical cover overseas in case they contracted the virus.

UK citizens have had free public healthcare for over 70, but the strain of COVID patients on the NHS has caused many to take out short-term health insurance to ensure the best care for them and their families no matter what their medical issues maybe during the pandemic.

Because of this, the UK has since a rise in demand for insurance services of 311%. However, the USA has only seen a growth of 26%, this could be due to those who can afford to have health insurance already having this in place and those who can not afford to do so are unlikely to be able to make these payments during an economic crisis.

Money & Banking

Aside from the health implications of COVID19, the biggest worry for many is finances, with increasing numbers of both UK and USA citizens missing out on learnings during the pandemic, banks are adapting to provide all the help they can.

In the UK, banks and loan companies swiftly offered payment holidays for loans, credit cards and mortgages. However, these were not applied automatically to customers and had to be manually applied for.

What’s more, the payment holiday lasts on average no more than three months, meaning that many customers were still needing to contact their banks for financial help after this period.

This led to a demand for banking and money in the UK to rise by 204% as the public required professional guidance through a troubling time.

The USA also saw a large growth of 148% as they applied for Pandemic Unemployment Assistance.

Credit & Debit Services

It is estimated that in the UK, over 4 million people are having to use overdrafts and credit services to pay for essential items throughout the pandemic. Many credit card companies are offering lower rates during this time, even if only relatively small and temporary, this has led to a rise in demand of 52%.

The USA has actually seen a decrease in demand at -16%. This could be due to Americans receiving Economic Impact Payments or could be because fewer Americans are out of work as lockdown rules have not been as strict as in the UK (depending on the state).

Real Estate

The USA has seen a meagre 3% rise in the real estate industry, this is due to very few properties being listed on the market, mainly due to homeowners not wanting to take the risk in selling their homes and potentially having to accept a low offering due it being a buyers market at this time.

Despite a ban on home viewings and completions for many months in the UK, a backlog of eager buyers and vendors boosted the industry when the market was reopened in June. A rise of 87% was seen in the UK overall, even with three months of no movement at all, many buyers and sellers were keen to push the conveyancing as quickly as possible fearing a second lockdown could prevent the chain a second time.

The UK government put a stop stamp duty until spring 2021, meaning that buyers were able to afford higher-priced properties, without having to alter mortgages, leading to many buyers flocking to the market. 

Accounting and tax saw a growth of 372% in the UK and 517% in the USA, and investment and wealth grew by 119% and 30%. Money really does make the world go round and it appears the biggest crisis within a generation can’t prevent people from needing professional financial services.