The Fintech sector, among many others, is being heavily affected by the current coronavirus crisis. Despite these new challenges the industry is facing, it should be seen as an opportunity for this sector to become more mature and solidify their positions. Technology used by the fintech sector isn’t new, but the implementations are quite innovative. This will be a real test to see whether the sector is resilient enough when facing serious challenges.
The biggest impact of the coronavirus crisis is funding. Many startups in the fintech sector are still raising money to expand their services. Although the lack of funding may not cause a complete cease of operations, these firms will still suffer. Like other startups, new fintech firms hold regular events for publicity or educating the general public. Although it is possible to do online events, many big events are postponed or cancelled completely. It is harder for fintech startups to create a positive noise and their marketing efforts would be affected.
Due to intensive use of online technology, current physical distancing measures might not impact fintech services much. They already allow remote management of financial matters, and the COVID-19 pandemic contributes to a sharp increase in the use of fintech services. Because people are no longer able to move around much, they are seeking reliable service of online payments for making purchases and receiving funds. In Europe, nation-wide lockdowns and self-isolations caused about a 70% spike in the use of various financial apps. Fintech startups are making full use of this opportunity and they are offering new options, like modified repayment plans for loans.
How Fintech Should Adapt?
Fintech services are supported by modern, digital technology. This allows them to innovate and provide fast responses to changing situations. Some ways that the fintech sector can adapt to a post-COVID-19 world include:
Payment Relief- temporary closure of businesses and furloughs have caused financial problems among many customers. Fintech could maintain customer loyalty by offering a one-month payment holiday. Banks and online credit providers may also offer loan modifications.
Provide Support For Local Businesses- existing services must be modified to help people in times of crisis. It’s important for fintech to enable their clients to remain operable during and after the coronavirus crisis. Consumers may purchase gift certificates to support their favourite small businesses.
To learn more about the impact of the coronavirus pandemic on the fintech sector, contact FINOVATION and speak to a fintech professional today who can answer your questions and assist you with making your business better.
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