Nowadays, in response to the crisis, many FinTech businesses, like the rest of the financial sector, have gone out of control. For instance, some have introduced cost-cutting measures, such as reducing their employees. Since all of them depend on transactions and volume-based sales, ensuring that as many expenses as possible are variable and fixed expenses are reduced is a top priority right now.
COVID-19 is driving many new FinTech developments, so the financial services sector might change dramatically in the next few years. With the pace of digital adoption increasing, companies’ capacity to adjust well to digital platforms will be critical to their future success.
Keeping an eye out for opportunities
The growth of digital payments
As the economy recovers, social distancing measures and risk awareness are likely to stay in place for some time. Many businesses would want to think about making long-term changes to their business models. Since few people have learned to work efficiently without physical contact while operating remotely, more digital solutions, such as document signing and notarization, will be required. More digital tools will be needed for the implementation of future-of-work models.
The growth of digital channels for payment, credit, business, and cybersecurity has increased as a result of COVID-19. Because the demand for credit during the disease outbreak is overwhelming conventional banks, the growth of FinTech lending and financial analytics will be a critical driver of change in the future. And because of the large amount of credit required combined with social distancing measures, improved technology is needed to grant a wide amount of loans and track the financial well-being of many individuals.
Technological adoption during the crisis
One thing COVID-19 has already proved is that companies and consumers are continuing to adapt to digital as a new way of life, implying that technology latecomers must catch up to thrive in the post-COVID-19 world.
For instance, a recent analysis of finance app downloads around the world found that during the height of the disease outbreak, the spread of COVID-19 and associated government lockdowns resulted in a 33.1-36.6% rise in regular downloads.
Such developments in the market will require the development of strong systems, data analytics to enhance and accelerate credit arrangements, and certainly, digital identification to boost financial inclusion, payment, and credit.
Governments are also expected to improve system integration and support systems to accelerate the growth of FinTech post-COVID-19 as a result.
Taking advantage of the Internet of Things
Another field is IoT-enabled contactless payments, such as autonomous driving, which allow customers to pay for fuel or food without having to handle cash or other potentially contaminated surfaces.
In addition, COVID-19 will help to accelerate the adoption of IoT-enabled payments.
Expanding partnership initiatives
For FinTech companies, one of the most significant outcomes of COVID-19 could be the ongoing acceleration of collaborations with financial institutions, that can provide funding, distribution access, and enforcement infrastructure.
FinTech companies may continue to seek partnerships with other FinTech firms, big techs, and nonfinancial services companies. This pattern of partnering is expected to continue. Open banking and banking-as-a-service regulations and efforts can play a key role in this.
For instance, integrated financial services that incorporate customers’ financial needs and habits, such as healthcare, have enormous potential. Almost everywhere, integrating payments and other financial items into health services is necessary.
Increasing the speed of economic recovery
Several payment companies may be well placed to assist in the faster payment of government relief funds, especially to those who do not have bank accounts. In the upcoming months, companies like PayPal, Marqeta, and others, as well as payroll-processing companies, might play a major role.
Reshaping the future
Even after COVID-19, FinTech companies may be forced to reconsider their mission and business models. It might be a good time to think big and take risks.
Social distancing is going to accelerate customers’ adoption of online—particularly mobile—channels for viewing and managing their finances.
The present economic instability has placed companies all over the world under pressure, including Fintech companies. Many in the industry, however, are already rising to the challenge, adapting their goods and services to meet the needs of consumers who are also dealing with the pandemic. Furthermore, many FinTechs are well placed not only to endure the crisis but also to make a positive contribution to the industry and society once the crisis is over, thanks to their unique capabilities.
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