Banking prepares for resurgence of consumer demand for lending, spending and retail traffic
As Americans emerge from our long COVID winter, all signs point to an economic bounce back and budding consumer optimism about what’s to come this Spring. Goldman Sachs and other Wall Street firms just updated their economic outlook, forecasting an 8% growth in GDP in 2021. On the consumer front, early data from the University of Michigan’s consumer survey reveals that increasing vaccination rates and federal stimulus dollars getting to work are resulting in consumer optimism, following a month-over-month rise in this key consumer index.
This optimism is expected to lead to a flurry of purchasing activity, reflecting people’s pent-up demand. The Harris Poll reports that nearly one-third of households making more than $100,000 plan to spend more this Spring than the same time last year. This spending goes for clicks AND bricks, with 71% of consumers planning to shop in physical retail stores at least weekly once the vaccination rollout is complete and “consumers get comfortable again with in-person experiences.”
A bellwether of the economy at large, retail spending is expected to be the highest we’ve seen in 17 years, according to the National Retail Federation, with big-ticket items topping the list. Most notably, 54% of consumers ages 35-44 are planning to buy a car this Spring. That buying is in addition to a strong housing market that finds home values consistently rising through the pandemic, along with brisk home sales. The strong market finds Millennial buyers fueling much of the home sales and in need of greater borrowing options for mortgages as prices rise.
For banks and credit unions, all of this consumer swiping and spending means opportunity – a rising tide of retail traffic in branches and the need for lending products like car loans and mortgages to augment consumer purchasing power. While foot traffic is unlikely to reach pre-pandemic following the migration to digital channels for many transactions, 66% of consumers continue to want a branch within 15 minutes of them to open an account and a full 44% of consumers report that branches will play a critical role in how they interact with their primary FI in 2021.