KBW Reconsiders Its Mobile Payments, Consumer Finance Projections

April 7, 2020         By: Steven Anderson

The big news on everyone’s mind lately, even in the mobile payments space, has been coronavirus and coronavirus-related matters. While there’s still plenty of shopping from home going on, it’s still not enough to make up for the loss of pretty much every brick-and-mortar shop out there and a whole bunch of restaurants and other businesses, with a few minor exceptions. Our friends out at Keefe, Bruyette & Woods (KBW) dropped word our way via a new report on changes made to some of their earlier projections.

Most of these projections are, both sadly and not at all surprisingly, downwardly revised. The problem, of course, is that it’s currently impossible to tell just how downward since no one knows just how long this shutdown will continue to run. We’ve already crossed the first round of 15 Days to Slow the Spread, which got another 30 Days to Slow the Spread added to the end of it. The notion that, on April 30, we could be looking 90 Days to Slow the Spread is not impossible, and therefore, the market is wedged so deep in uncertainty that no projection can really happen any more.

KBW also needed to recalculate its rates in the face of higher unemployment. In one week alone, the economy lost just over three million jobs, a move which is certain to have a detrimental effect on mobile payments use and shopping, whether online or brick-and-mortar. The combination of reduced demand from unemployment coupled with vastly reduced supply as only some retailers are even open is a massive overall loss. Significantly reduced quality of available credit will also serve as a drag on operations.

However, KBW is considering some payments-related stocks likely to hold out during these uncertain times, including American Express, thanks to its mix of offensive and defensive protocols. Ally Bank, Capital One, Discover, and Synchrony Financial are also good bets to hold out in the midst of all this confusion.

It’s also important to point out that governments worldwide are pulling out pretty much all the stops to keep liquidity flowing—up to shelling out at least $1,200 per person, and potentially more than that, depending on income—and such a move should prove helpful going forward. But with demand starting to buckle, and supply catastrophically slim in some areas—just try finding toilet paper on shelves—this may not be enough to keep things aloft.

Only time will tell how this all boils out, but a massive economic shutdown doesn’t really support mobile payments operations very well. Hopefully things can be righted around before too much longer has passed.