COVID-19 changed how many Australians manage their money and some ASX financial stocks could benefit from this.

Strategic insights consultancy Nature has released a new study revealing Australian consumers are becoming more engaged with their financial affairs.

For 63 per cent of Australians, saving money was rated as more important than ever before. Nature found 43 per cent picked up the habit of reviewing or creating their budget and savings and will continue with it going forward.

Furthermore, 35 per cent of Australians are regularly reviewing the market for alternative financial products.

 

ASX financial stocks: the winners & losers

One influence in the banking sector has been the introduction of Open Banking reforms. These laws began on July 1 and make it easier for consumers to switch providers.

Three of the ASX’s Big 4 banks (the standout being Commonwealth Bank (ASX:CBA)) are down in 2020, although less than at the height of the “pandemic panic”.

Conversely, investment or financial management platforms Cashwerkz (ASX:CWZ), Raiz Invest (ASX:RZI) and Douugh (ASX:DOU) have all gained in 2020 – particularly the latter which only listed in October and is up over 800 per cent.

Buy now pay later (BNPL) stocks have all been winners too, led by Afterpay (ASX:APT) and Sezzle (ASX:SZL).

Both sub-sectors are becoming increasingly favoured by consumers. 42 per cent of Australians are considering using a BNPL product at Christmas and 36 per cent of Australians are using budgeting apps.

The top four categories that consumers are likely to use BNPL services for are: furniture and homewares, tech and electronics, holiday bookings and apparel.

The first of these was the highest at 49 per cent and is evident in the substantial growth of homeware ecommerce stocks MyDeal (ASX:MYD), Temple & Webster (ASX:TPW) and Adairs (ASX:ADH) in 2020.

The survey also found 60 per cent of all Australians negatively affected by COVID-19 expect difficult times ahead and argues they are using digital tools as quick fixes for planning or for the future.

Nature’s Melbourne managing director Justin Connally is not surprised about this short term fix.

“This allows people to put their bills ‘on hold’ and retain a sense of financial normalcy,” he noted.

“It also provides extra time and disposable income during a time when it feels most warranted.”

 

Neobanks aren’t actually winning

Curiously though, 67 per cent of people have never heard of neobanks despite significant hype around the sector.

Even among Australians who utilise them, Connally notes they aren’t necessarily using them as their main financial service.

“The heightened sense of uncertainty in the wake of the pandemic allows the traditional banks to retain a level of trust that neobanks are yet to build,” Connally said

“Switching to a neobank as their primary financial institution could be too risky and complicated a change for people to undertake, which begs the question: are Australians looking for short-term fixes to ride the pandemic out before implementing any major changes to how they manage their financial affairs?”

The list of ASX financial stocks does not include any neobanks.

While Douugh (ASX:DOU) is often put in this category it has shrugged off this label. It wants to be a subscription-based “financial control centre” for its customers.

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