The impact Covid-19 has had on FinTech
COVID-19 has resulted in huge demand for digital and online banking services – individuals and corporations have rushed to their banking service provider in order to take out emergency loans, gain consultation on their financial situation or even to just manage personal finances, argues industry expert Saka Nuru
When considering the impact COVID-19 will have on our society, the positives are few and far between. But, there are still some lessons which have been learned and positive social change which has been fast-tracked to the forefront of human initiative as a result of this crisis.
Let me be clear, the very minor victories won out of this terrible situation in no way makes up for the devastation caused and lives lost to this hugely disruptive disease.
That being said, the impact being had on financial technology advancement in the banking sector has largely been for the best.
For example, traditional banking institutions have finally started to strip down old legacy IT systems, and replace them with fintech more suitable to the current climate: The impact on the banking sector COVID-19 has resulted in huge demand for digital and online banking services – individuals and corporations have rushed to their banking service provider in order to take out emergency loans, gain consultation on their financial situation or even to just manage personal finances.
And, with in-branch meetings no longer an option, traditional consumer banks have had no choice but to introduce new financial technology to deal with this influx of demand…
For a start, cloud-based SaaS (Software-as-a-Service) solutions have been essential not just for office based workers in the UK, but also bankers, wealth managers, and finance professionals, enabling them to keep communication lines open, and transfer company culture to an online environment. If COVID-19 had hit 10 or so years ago, it’s safe to say that our economic situation would be in a much worse position than it is today.
Furthermore, regulatory technology (RegTech) has been a growing trend in the financial sector in the past few years, but demand for automation, customer onboarding and risk assessment technologies, enabled by artificial intelligence, and other cutting edge technology solutions, has been accelerated by the COVID-19 crisis. RegTech, quite importantly, can undertake laborious, often time-consuming tasks, without human intervention – running full background checks, for example, in a safer, more accurate and more comprehensive manner than a human could ever complete.
The implementation of this technology in banks today, means professionals can be freed up to focus on more important tasks at hand. Impact on fintechs Unfortunately, many UK based fintechs are relatively small or still in the ‘start-up’ phase of their life cycle. Thus, we have seen many fintechs tighten finances, cut costs and furlough staff.
Monzo’s CEO, for example, announced he will forgo his salary for one year, and one fifth of the company’s employees will need to take voluntary unpaid leave of absence for the business to cope. However, start-up fintechs have grown a reputation for flexibility, and as the fintech ecosystem has proved transformative for the banking sector and consumers alike, it could be that demand for innovation will boom again in the next few months.
Fintechs are also in a unique position where they can continue with the services they’ve already provided. Just because the economy has been harsh, does not mean that consumers are in no less need for financial technology services: be it online financial advice, disruptor banking apps, or loan advancement schemes.
In addition, the fintech community has been a force for good in this crisis – enabling personal finance management at a time when people need it most, and even assisting with the execution of government schemes, such as the Coronavirus Business Interruption Loan Scheme.
From the top, an abundance of Fintech companies, such as Fintuity and Greensill Capital, started providing services for free to frontline NHS workers.
In all, COVID-19 may have fast-tracked demand for cutting-edge financial technology which can be used to facilitate traditional banking institutions, and well-grounded fintech companies, but the frail economy has created a volatile environment for innovative start-ups which the UK has grown a reputation for nurturing.
Moving forward, we should hope to see further government involvement to assist these start-ups and facilitate growth, regardless of market volatility and a very bleak economic situation.
Saka Nuru is an industry expert and head of product marketing for Fintech Ecosystems at Intuit Quickbooks
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