The Pandemic’s Impact on the Global Fintech Industry

  • Authorities across the globe are encouraging the use of digital payments in response to the pandemic
  • An increase in work-from-home (WFH) arrangements, adoption of telemedicine, teleconferencing, online education and telebanking are further accelerating the push for e-commerce
  • Increased use and adoption of e-learning and web-based learning also provides an opportunity, as most transactions such as fee payments are conducted online
  • Revenue for those firms that were not ready to adopt such digital services dropped amid the lockdowns, while cashless-transaction firms such as PayPal, Square and Braintree benefitted from the shift
  • Recent developments include the following:
  • High use of online digital models and online products and service channels
  • Autonomous finance — customers can delegate recurring tasks such as paying utility bills and making other regular payments to fintech solutions. This works through artificial intelligence (AI) and machine learning (ML)
  • Open banking — according to Investopedia, it provides third-party financial service providers open access to consumer banking, transaction and other financial data from banks and non-bank financial institutions through the use of application programming interfaces (APIs)
  • New-generation financial institutions are increasingly leveraging fintech solutions to offer convenient digital-only banking services that require no physical contact
  • Other trends include advancing financial inclusion programs globally, crowdfunding, insuretech, biometric security systems, regtech in financial services, using one platform for multiple services, blockchain and big data
  • Many fintech startups have emerged due to these trends driving the sector
  • Payments. Negative impact on point-of-sale (POS) payments due to the slow recovery in spending globally. Peer-to-peer (P2P) digital payments are steady and strong. Ecommerce payments are witnessing a secular shift as consumers move away from using cash and cards to digital alternatives such as online payment and internet banking.
  • Lending. Consumers and businesses will likely miss regular payments, resulting in a short-term impact, but this segment should strengthen in the long term. Companies in the lending business could minimise losses through using advanced credit-risk algorithms to serve small businesses and consumers. We could see a slowdown in online lending, leading to industry consolidation.
  • Investment services. Market volatility is significant, and fintech firms in the retail brokerage business should continue to benefit from this. Consumers will likely look for hybrid robo-advisors and deeply integrated platforms.
  • Technology providers. Saas-based tech providers to B2C and traditional financial institutions are gaining momentum as traditional financial institutions focus on cost reduction. Offerings from these tech providers include KYC through video conferencing, chatbots, credit-scoring platforms and loan-origination platforms; this segment should continue to see improvement.

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