People had high expectations that the economy would rebound in the year 2020 but with COVID-19, it has become a year that will be dreaded by generations to come. The pandemic was declared in March 2020 and began hitting economies and businesses worldwide. COVID-19 has had a massive impact on FinTech Startups and companies and affected the Digital Payments space. Here is a roundup of shortand long-term impacts.
1. Everything goes contactless
Even payment cards had to go no-contact. The traditional ‘hand-over-the-card-and-get-it-swiped’ stopped being safe and people demanded a virtual payment system that could minimize the contact between the payer and the payee. This moment of opportunity was used up by a new crop of Fintech Startups that have made it happen. They involve innovative ways of Digital Payments that allow complete, no-contact transactions without the need to exchange cash or step out of one’s home.
Image : Times of India
There was a massive surge in the Digital Payments recorded by many Fintech companies post the lockdown imposition on 22nd March 2020.
2. Innovations in payments
Fintech space was hugely impacted by COVID in terms of innovations in payments. Introduction of QR codes, no-contact biometric verification, and the likes have taken over in the payment space. This comes as an immense relief over the Point of Sale (POS) signature machines that had to be manually signed by the payers. More such innovative contactless payment modes would enter the markets soon, as the pandemic progresses.
Image: Times of India
3. Focus on rural digital users
India is the second-largest digital market after China, with over 500 million active users of the internet. The number of rural users is upwards of 10% more than urban users. After the COVID outbreak, the Fintech and Digital Payments firms have a vast scope to focus and excel in platforms specifically designed for rural areas.
4. Consolidated Fintech solutions
The outbreak of COVID also saw Fintech companies and service providers offer collated services on a single platform. Services like lending, borrowing, fund-transfer, UPI, etc. are being provided as a consolidated application. During the pandemic, this is helpful for the user to manage finances and spends. This could quickly proliferate into becoming a Fintech culture, where multiple players join hands to form a single interface where all service providers could be available without the limitations of geography.
5. IT enterprises must depend more on IA—Intelligent Automation
The growing pressures of Fintech companies eventually led to putting excess strain on IT companies, which are needed to develop the technology that drives the Fintech industry. The enterprise-level IT firms have buckled in because of the disease, and the cracks are showing. Despite so much demand, the supply end is lagging. The vast teams are challenging to manage working remotely, and hence the supply is sluggish. The enterprises must depend more on the Intelligent automation technologies, which can stabilize the lag and get the work moving along while being remotely controlled. Other operational challenges also doom the smooth working of both Fintech and IT companies.
The term Fintech is loosely used and encompasses around 11 industry verticals, including digital lending, payments, Cryptoassets, Insurance-based Tech Startups, and WealthTech, apart from many others. This makes the understanding of the term, “FinTech” challenging. It can mean many various things to different people. Hence it is quite a task to gauge the impact of COVID on the industry. Some verticals of Fintech have done exceedingly well amidst the COVID times like virtual payments, but many like InsurTech have not seen a boost in the way business has happened.
Also, the number of subscribers and users might have increased, but these companies have not found the fancy of investment banks and funding companies. Hence, they have not landed with a windfall of money in the COVID era, severely depriving them of the liberty to make the technological upgrades and innovations required to tackle the situations.
COVID-19 being a threat to financial security in users too, has led to cash hoarding and panic leading to an overall shrinking market and hence it is a situation of uncertainty, where on the one hand the whopping surge in Digital Payments has been recorded, and on the other, there is a significant drop of funding volume in the realm of Fintech.*
Time to upskill
Since the onset of the pandemic, we are witnessing a revolution in the Fintech space. Organizations, small businesses, and ordinary people are increasingly switching to Digital Payment methods. Considering the momentum at which technology is being adapted in the FinTech landscape, constant upskilling is necessary for FinTech professionals to stay afloat in the market. Now it has become imperative to upskill Fintech professionals. Being adaptable and gaining new Fintech capabilities will help FinTech professionals to flourish. The secret to success is learning to work with new ideas and technology rather than seeing it as a threat to their jobs.