The coronavirus pandemic is putting a toll on the global economy at large, and although tech and digital companies, including fintechs are arguably the most prepared, they are still facing the impact in various ways.
The impact of the global Covid-19 pandemic is already being felt in every nation and every industry, and has already delivered the fastest, deepest economic shock in history, experts say. Around the world, “nonessential” businesses are closing their doors, governments are issuing orders to stay inside, and people are preparing for a changing work environment.
Though the disruption is certainly hard on many businesses, it will ultimately be the way these companies embrace technology.
Shifting to remote work enviroments
One major impact that the coronavirus pandemic has had on the business world is the working environment, with companies being forced to rethink the way they work and implement remote working.
Tech giants, including Google, Twitter and Coinbase, have instructed their employees to work from home, and tighten up policies such as business travel to lessen the likelihood of the infection spreading.
In Bahrain, fintech solutions provider and telecommunications firm, stc Bahrain, announced last week that it would introduce new working procedures to ensure the safety of its workers while continuing to offer fintech services to support the country’s residents.
Similarly, in the United Arab Emirates (UAE), more than 37% of domestic companies are planning to shift to remote work.
Across the UK, several fintechs have even ramped up their responses to the spread of the coronavirus with at least one running rehearsals for a worst-case outbreak. Earlier this month, Curve closed all its offices and ran a “remote test day” to ensure its services remain up should the company be forced to enact a compulsory work from home policy.
Frank Zhou, CEO and founder of Zeux, isn’t too worried about the fintech sector as companies in the field are naturally agile and flexible.
“Fintech companies are traditionally – and necessarily – fast adapters: from adopting paperless and cashless approaches to implementing new software and cloud-based systems, as well as remote working capabilities,” Zhou told Fintech Magazine. “Fintech companies are often built better to withstand impacts that we are seeing sweep across other industries at the moment.”
For Pete Watson, CEO of Atlas Cloud, one of the very few silver linings of the coronavirus is that, for the fintech sector, the pandemic is creating an opportunity for the industry to re-think its working practices.
“We have an opportunity here to prove that people can work as productively and securely at home,” Watson told Fintech Magazine. “This is because many people lose hours of their working day every day commuting to work or meetings and carrying sensitive information with them on devices which can be lost and stolen.”
Ramping up tech capabilities and digital adoption
In this changing work environment, technology has a huge role to play, and this fact has been made very clear with the coronavirus pandemic.
According to Stefanini Group, companies are finally investing in the technology needed to make remote work possible, an area that has so far been neglected.
Not only that, companies are also leveraging cutting-edge technologies to combat the virus directly, with, for example, the White House working with major tech firms like Amazon, Microsoft and Google to pool supercomputing resources to discover new treatments and vaccines, and Chinese tech firms, such as e-commerce giant Alibaba, leveraging artificial intelligence (AI) to allow for diagnosis to be made in just seconds.
At a time when authorities are recommending to limit physical contact, the trend towards cashlessness and digital payments will likely be positively affected, experts say. In both China and India, regulators and institutions have urged citizens in their respective countries to use digital payments instead of cash to help stem the spread of the virus.
In Africa, Safaricom, the telecommunications company behind the region’s leading mobile money service, M-Pesa, said earlier this month that it would implement a fee-waiver in Kenya to reduce the physical exchange of currency.
Josh Bell, general partner of Dawn Capital, believes the pandemic will be a catalyst for leveraging mobile-first banking. “We’re not going to go into local branches anymore, so the high street banking footprint will radically shift towards apps and other remote tools,” Bell told Fintech Magazine. “
In wealth management, myproperity, a provider of an online solution for accountants and advisors, said it has seen its number of users double since December 2019 as financial advisors are increasing moving online.
“For advisers and accountants, the spread of the virus means there’s a forced shift from face-to-face meetings to online ones and they’re having to collaborate digitally, helping small businesses and households brace for tougher times,” Peter McCarthy, founder of myprosperity, said, quoted by Fintech Business.
Consumers’ growing desire for digital banking services will be forcing many traditional financial institutions to fast-track digital innovation efforts, according to Jim Marous, co-publisher of The Financial Brand. As a result, many legacy banks and credit unions will likely turn to fintechs for assistance in bringing better digital banking solutions to the marketplace, he said.
To help banks serve their customers through this difficult times, many fintech providers have extended free, discounter or accelerated deployment offers to financial institutions. According to a Forbes report, more than 120 fintechs have done so, so far.
But the coronavirus pandemic will likely have a negative impact on the fintech sector too. Chinese fintechs will likely face the worst negative impact, with funding set to decrease as investors shy away from the market. Fintechs in the lending space may be facing the biggest risks, experts say, with funding costs going up and default rates likely to rise.
Featured image edited based on image by Fusion Medical Animation via Unsplash
