Fintechs that offer innovative payment services and solutions have helped the banking and payments industries evolve since the 2008 crisis, and fintech is an independent industry in itself. On that note, we look at the trends emerging from the COVID-19 crisis that will have significant and severe impacts on the banking and fintech sectors.
As human contact poses a threat, cash seems to have taken the backseat for some time while debit and credit card payments have seen a rise, especially in contactless transactions. The undisputed champion in the banking and payment space are digital & contactless payment innovators that have introduced more convenient modes of digital and online payments.
Companies and enterprises that complement the digital and contactless payment sectors are estimated to grow exponentially once global and regional economies start to recover. A report by Finch capital laid down the major predictions that will influence markets during and after the pandemic. Although the post-pandemic sounds like a haven for fintech, the biggest challenge is the financial year 2020-21.
It will be uniquely difficult for fintech companies to steer their ship through the storms of Q2 & Q3, where no one seems to be able to estimate what markets would look like. Especially because no one knows the risks and developments around the disease till that time in a way that can be directly related to markets. Especially because no one knows what will be the risks and developments of the disease that can be directly related to market fluctuations.
Governments around the world are tackling the problem in two ways: with medical protocols and with financial stimulants to keep economies running.
Managing Partner at Finch Capital, Radboud Vlaar said that once the dust settles, disruptive winners will “take all” with the surge in demands from “financial services for technology to master digital-only interaction, enabled by AI and big-data analytics.“ The scenario will likely end in high investments in digital retail and payment and a significant change in consumer behavior.
A thorough conclusion cannot be drawn since there are no tangible parameters to measure and estimate the future conditions. A crisis of this magnitude hasn’t been witnessed in almost a century. That said, most economies will suffer but a healthy recovery scheme and a supportive finance sector will help fasten the process.
As Vlaar said, by the time all this is over there will be little or no competition in the fintech space since market share will respond to the utility of technology during the initial period. Simply put, the payments and banking sector is in for a ride and for those who survive, it seems to be a promising future post-lockdown, only for fintech players who will innovate even in these times.