Financial technologies, in comparison with other businesses, now are in the most advantageous position.
On the one hand, it has become more difficult for them to attract investments, cooperation with banks in the crisis has also become more complicated.
On the other hand, the pandemic is setting new trends. Following them will help not only to survive but also to increase profits.
How fintech services increased their demand
Who are the services of fintech companies usually focused on?
On youth and business. They are the most active consumers of financial services. But the pandemic is powerfully stimulating demand among other segments of the population. People are now more than ever interested in less queuing at the checkout, ordering goods on the Internet, and saving up. That’s where Fintech increased its demands.
The gig economy
Thanks to the pandemic, the gig economy also received a powerful impetus for development.
According to Forbes, two-thirds of companies hire freelancers to reduce labor costs. And this trend will continue.
But the vast majority of freelancers do not have official employment, which creates difficulties when trying to take out a loan or, say, take out insurance. And this is an opportunity for fintechs. Some are already using it.
For example, some startups offer a range of financial solutions exclusively for freelancers and small entrepreneurs. Here you will find banking services and services for accounting for funds – everything in order to make the life of a self-employed person more comfortable.
Cooperation with banks
Banks have credibility, money, and a huge client base – something that fintech startups lack. Given the pandemic and crisis, working with them is a necessary and sensible step.
Another thing is that in practice it turns out differently.
Partnerships between banks and fintechs very often end in failure.
Or, alternatively, the former absorb the latter, which, in particular, is reported by World Fintech Report 2020. There are many reasons for this, but if you generalize, you get one – different approaches to work.
After all, Banks are conservative, do not understand the specifics of IT, are careful in introducing new solutions.
Fintechs often act on a whim, they do not have a well-thought-out business strategy, and this frightens off banks.
During the pandemic, the Banks evaluated everything: how the management builds communication, how it solves problems, how it controls the company’s financial flows.
These are all important indicators of reliability. Although, banks need cooperation with fintechs as well. For them, this is an opportunity to “modernize” their services. Make them faster, easier, and more accessible at any time.