Fear of a Covid-19 pandemic caused huge changes in the world on fintech. People started to abandon cash in favor of card payments as banknotes were seen as a possible source of infection. Contactless payments seem to be the most “sanitary” payment form available today. Quarantine and social isolation mean going online, which means that online shopping is rapidly expanding. People will stop going to crowded places at all costs, so businesses will move as much as possible online. As a result of the pandemic, country borders have been boosted, tourism has virtually halted, and the use of payment cards abroad has dramatically decreased.
The market is putting pressure on both banks and fintech firms. All who make money from debit card transaction fees will be affected by the dramatic drop in spending and exchange.
Fintech, on the other hand, would be in a marginally better place than conventional banks: most of a fintech company’s similar services during Covid-19 are delivered remotely, and the corresponding applications are designed with the client’s convenience in mind.
Stock markets have become a minefield as a result of the coronavirus; traders are reluctant to make unnecessary changes, fearful of the impending recession. Only the most adventurous daredevils can afford to invest today. This is hurting the global economy, and global trading sites like Robinhood and eToro are no longer profitable.
The US Federal Reserve made the biggest cut in the federal funds rate in more than a decade to help smooth things over. Unfortunately, the most well-known commission-free trading fintech will not be able to lower service prices; instead, they will most likely offer to invest in stocks of companies that will emerge from the global crisis unscathed.
The rise of banking applications
Who’d have guessed, but the Covid-19 pandemic is propelling humanity forward. It’s obvious how rapidly everyone is going online and how they’re attempting to make their services more versatile, comfortable, and feature-rich. App apps for banks and financial services are now advancing at a breakneck pace. The race for new technical innovations is heating up. So, what do you think? Artificial intelligence, new services through the Open API, and new consumer options?
Government and regulator support
Governments and regulators will propose a number of steps to support the segment in order to save the economy. South Korea, for example, has proposed more inclusive guidelines for fintech for the time being. The Bank of England has devised an action plan and urged the government to support local businesses that have suffered losses as a result of the coronavirus. The majority of European banks have made deferred loans and mortgages available. Tax payments and social security contributions for March will be automatically canceled in certain nations. We hope that these steps will help fintech survive this difficult period.
The crisis is not only losses but also new opportunities. It is critical to be agile during this period of global volatility induced by Covid-19. Remember that your company’s flexibility is determined by the technical properties of your product: invest in technology, and your company will be much easier to restore in a changing environment.