What the experts are saying
We’re back with the next instalment in our popular series of industry spotlights and this week we’re focusing on the FinTech industry. The coronavirus crisis has escalated the use of technology within many industries from a ‘nice-to-have’ to an essential means of survival. This is also true within the financial services sector. Without the use of certain technologies many financial organizations would have been unable to operate during the crisis. But although technology has been critical during the crisis, the fate of some “FinTechs” hangs in the balance as economic downturn scales back investments.
With that in mind, let’s see what FinTech experts are saying about the impact the crisis has had on the sector, how organizations have navigated the pandemic and – most importantly – the opportunities that are available during recovery.
- Capgemini, a global technology, professional and consultancy organization, predicts that the post-pandemic era will usher in further collaboration between traditional banks and FinTech organizations, as the demand for digital experiences in banking increases.
- The cloud and other transformational technologies such as AI and machine learning have been essential for maintaining business continuity in the financial industry, enabling staff to work from home and scaling IT infrastructure at a reduced cost. These technologies will also be a key part of the recovery phase.
- Due to their digital nature and tendency to be agile and innovative, only 3% of UK FinTech companies were critically or severely affected by the pandemic, according to research conducted by company database Beauhurst — compared to 17% of high-growth companies in other industries. The most common negative impact was a loss of key customer groups, such as small businesses.
- Those FinTech organizations that act as alternative lenders are among the hardest hit in the sector. Reduced incomes, the introduction of loan holidays and increased restrictions have severely reduced the issuance of loans creating challengers for lenders – and consequently caused a decrease in investment in P2P lending.
- Although deals and investments in some areas of FinTech have dropped as investors attempt to conserve their budgets, some sectors have seen a record number of deals. The payment technology sector saw more deals in Q2 2020 than in 2019 altogether. Although the value of these deals was relatively low, the volume of deals signifies this sector as an area of opportunity for FinTech companies looking to expand.
Like with many other industries, some FinTech and financial services organizations have found business success during Covid-19 while others have faced significant challenges. As we enter the recovery phase and the line between banks and FinTechs continues to blur it is evident which areas hold opportunities, and those will be the areas to concentrate on in the coming months and years.
Eleanor Rhodes is a PR Account Executive at IBA International.