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A Consumer Finance Perspective on the "New Normal"

With 2021 drawing to a close, it has been nearly 2 years since most of us first heard of COVID-19. Without a doubt, everyday life has changed and in some ways, we will never be the same. The impact has been felt across both our personal and our professional lives, leaving many of us wondering if we have arrived at the “new normal” yet, and what exactly that means in this hopefully soon to be post-pandemic world.

In 2020, Phase 5 conducted a study of over 2,000 North American consumers to better understand how COVID-19 in its early days had affected their attitudes and behaviors related to consumer financial services specifically. In 2021, we returned to the U.S. market with that same study plus a few additional questions given the context and wisdom provided by another year. Findings from this new study (and its comparison to previous results) have given us the following insights regarding key elements of the “new normal”, and the financial services FIs can offer to meet consumers’ needs.

CARPE DIEM: Discretionary Spending & Buyer Behavior

While the economic impact and uncertainty of 2020 gave consumers reason to reduce spending and increase saving, the gradual re-openings of 2021 have fueled optimism and provided opportunities to unleash pent up demand for bigger ticket items. In fact, nearly half (47%) of respondents to our 2021 survey are considering a purchase greater than $10,000 within the next 6 months, such as a vehicle, home improvement, or big vacation.

As well, fewer consumers are putting off this type of big spending. Seize the (post-pandemic) day! While 29% reported plans to delay a big purchase in 2020, only 11% report having those plans in 2021. This enthusiastic behavior creates opportunity for financial institutions offering credit cards and loans to help consumers bring their dreams to life. For instance, 45% of those planning a vehicle purchase expect to use a loan to finance it, and 21% of those planning a home renovation expect to use a credit card.


Just because consumers seem ready to increase their personal spending again, it doesn’t mean they have thrown caution to the wind. After having experienced a once-in-a-lifetime event like COVID-19, one can understand how consumers’ mindsets may have changed to become more diligent, and generally more prepared for a rainy day.

We see this sentiment reflected in their intentions to shop around for the best financing options in 2021. Between one quarter and one half of respondents report having searched for a better deal on investment advisor fees (27%), mortgages (34%), and credit cards (41%) in the last 12 months. Since most households (80%) have not experienced any positive change in their income as a result of COVID impacts, it is understandable that they would continue to be thrifty despite the inherent desire to re-engage in spending on larger items again.


In addition to shifting attitudes around whether and when to spend money, consumers have shifted the way they interact with their financial institutions. It’s no surprise that when people were forced to stay home, their tendency to adopt digital tools and tech solutions increased. For example, the amount of consumers who reported using a mobile banking app went from 62% in 2020, to 80% in 2021; a 29% relative increase in just one year. As well, the proportion of consumers who reported being uncomfortable with applying online for a credit card (48%) or mortgage (36%) in 2020 dropped to just 8% and 10% respectively in 2021.

While COVID impacts helped to shatter consumers’ tech fears, that bold willingness to try something new may have extended beyond the adoption of digital tools. More specifically, more consumers are moving away from relying on the more traditional primary financial institution (PFI). While 10% of consumers reported having no PFI in 2020, the number increased to 17% in 2021. As they shop around for the best credit cards, loans, and mortgages, multiple financial institutions are in the consideration set 53% to 65% of the time.


Consumers have been through “unprecedented times” over the last 2 years, and there is no question that behaviors and attitudes have changed as a result of these experiences. However optimism prevails in the “new normal”. We have indicated that we are ready to move forward, with quality-of-life improvement purchases like homes, cars, and vacations. But we’re proceeding with caution, shopping around to get the most for our hard-earned money, and breaking the mold of tradition when it serves us better.

As businesses adapt and invest in ways to better serve consumers in the post-pandemic world, research can help reduce risk and improve outcomes. Contact us to learn more about the studies above, or to discuss a custom study for your organization. Because one thing is certain: times have changed and consumers’ needs and expectations have as well.

Written by Steve Hansen

Steve Hansen, MBA, is the President of Phase 5 US and the leader of the firm's Data Analytics practice. With almost 2 decades of experience in client-side marketing strategy, market research, and product management, Steve brings a client’s mindset and drive for actionable results to each project. He has extensive experience in capturing the view “from the outside” with a special focus on product and service innovation. Steve is based in Minneapolis, Minnesota.