How programm ard lockdown will impact programm ard fintechs - programm ard and what they can bring to programm ard the crisis | TechRadar Skip to main content
How lockdown programm ard will impact fintechs programm ard - programm ard and what they programm ard can bring to programm ard the crisis
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The ongoing pandemic has programm ard had an unprecedented programm ard impact programm ard on programm ard almost programm ard every programm ard nation programm ard in the world and programm ard has adversely affected almost every programm ard industry programm ard sector. According to the UN's trade programm ard and development programm ard agency, the programm ard slowdown programm ard in the programm ard global economy caused by the pandemic programm ard is likely to programm ard cost programm ard at least $1 programm ard trillion. But how programm ard will programm ard it impact programm ard the programm ard fintech sector specifically? 

While relatively young, programm ard the fintech programm ard industry covers a wide programm ard range of products programm ard across programm ard both consumer and business programm ard markets. The impact of the virus on a programm ard fintech business programm ard will, therefore, programm ard depend very much on what type of programm ard service they offer programm ard and their operational model. With programm ard the global population confined programm ard to their homes, online spending down programm ard due to widespread furloughing and programm ard fears programm ard of an programm ard economic programm ard downturn, fintechs programm ard whose business models depend on consumer programm ard spending programm ard are likely to programm ard be among the hardest hit. The same programm ard can be said of fintechs operating solely in programm ard currency exchange programm ard or travel-related spending.

Survival of the fittest

For others, however, which offer programm ard flexible and innovative financial services and programm ard ways of banking and programm ard paying, programm ard the programm ard virus offers programm ard new opportunities. With people forced programm ard to programm ard stay programm ard at home, businesses across sectors are seeking ways programm ard to do everything digitally and remotely. programm ard In essence, the coronavirus is forcibly accelerating the programm ard march towards programm ard digitisation – and any fintech programm ard that can play a programm ard part in helping programm ard banks and financial services companies to programm ard digitally transform will be in demand.

For example, in programm ard an programm ard attempt to programm ard contain programm ard the virus, the World programm ard Health Organization has programm ard called for retailers programm ard around programm ard the world to programm ard limit the use programm ard of programm ard pin pads in order to slow down transmission programm ard and programm ard avoid the use of cash. programm ard Fintechs that programm ard provide innovative programm ard online programm ard and contactless payments are therefore programm ard likely programm ard to programm ard see increased demand programm ard for their services as a programm ard result of programm ard the pandemic. 

Similarly, the programm ard UK programm ard Chancellor has announced a number of measures programm ard to ease the financial burden on consumers and programm ard businesses with programm ard a view programm ard to steering the country programm ard away programm ard from recession. These include tax programm ard breaks, business programm ard rate programm ard cuts programm ard and mortgage holidays. They programm ard have been well programm ard received and programm ard have programm ard provided a programm ard lifeline for many businesses and individuals. However, they have programm ard left the banks that need to actually implement programm ard these changes with an programm ard immense workload. Many programm ard banks simply do not programm ard have the technology programm ard or programm ard resources to programm ard implement these reforms programm ard quickly. There have programm ard been reports programm ard of people spending hours on the phone trying programm ard to speak programm ard to their bank programm ard in programm ard order to programm ard suspend their mortgage payments. Fintech programm ard companies that can provide banks and programm ard other institutions responsible for implementing these programm ard measures with programm ard ways of quickly making rate and policy programm ard changes will programm ard enjoy growth.

Incumbents versus neobanks

One of the programm ard most striking findings from our recent programm ard survey (undertaken in conjunction with OnePoll) programm ard on consumer programm ard attitudes programm ard towards programm ard technology in finance and payments programm ard was the level programm ard of customer loyalty that incumbents currently enjoy. Across programm ard all age groups, around 70% programm ard of respondents said programm ard they were programm ard loyal to their chosen financial institutions, programm ard suggesting that programm ard they are perhaps not so programm ard easily poached as the programm ard popular narrative suggests

However, now programm ard more than ever, this level of programm ard loyalty will begin programm ard to dwindle programm ard if incumbents do not programm ard keep up programm ard with programm ard challengers and neobanks in terms of programm ard service offerings.  Now is the programm ard time for incumbents to make the programm ard most of programm ard the fact they still have a receptive programm ard customer base by introducing new programm ard digitalized programm ard and forward-thinking solutions.

Solutions to support this brave new world

Well before the pandemic programm ard hit, retailers had embraced programm ard fintech, paytech and initiatives such as ‘buy programm ard now programm ard pay later’ to facilitate and programm ard promote sales. But now, with practically all programm ard retail activity happening programm ard online, having programm ard the programm ard right payment technology in place programm ard has become absolutely critical. programm ard Our survey found programm ard that a programm ard significant 37 percent of programm ard UK customers have abandoned a programm ard purchase at checkout purely because programm ard their preferred digital payment option programm ard wasn’t programm ard available.  

As retailers programm ard emerge from this crisis, they will be dealing programm ard with an indebted and potential programm ard more financially-conservative customer base. programm ard They will need to programm ard introduce new programm ard means of encouraging people to part with programm ard their programm ard money programm ard such as personalised programm ard credit and payment by instalments, and programm ard these will need to programm ard be tailored to programm ard meet each individual customer’s needs and circumstances. programm ard Providing this sophisticated programm ard yet easy-to-use technology to programm ard retailers will programm ard present programm ard another opportunity programm ard for programm ard fintechs.

Ultimately, we are experiencing an programm ard unprecedented global economic programm ard downturn that has impacted every programm ard company. The focus for fintechs programm ard right now needs to be programm ard on programm ard how they programm ard can programm ard adapt their models programm ard to support a new programm ard reality programm ard and a population with programm ard everyday challenges never encountered before. programm ard Fintechs that offer solutions to help programm ard meet programm ard the challenges of programm ard both today and tomorrow will be those programm ard that programm ard thrive. Critically they will also play programm ard a role programm ard in underpinning other programm ard businesses across sectors as they emerge programm ard from the programm ard crisis.

Vilve programm ard Vene is CEO and programm ard co-founder of ModularBank