The Future of Fintech after the Covid19 Crisis
The COVID-19 pandemic is now a global crisis, with the number of known cases climbing daily and hundreds of millions of people in lockdown.
Countries strive to support their people and public health systems, and their economies are grinding to a halt. This will sow the seeds of an unprecedented global economic crisis.
The entire banking ecosystem has been put under stress, with a dire need of personalized digital solutions to keep clients connected. The pandemic calls for visionary leadership in the sector and a strong capital foundation to cushion the effects of the pandemic to organizations, businesses, and other industries in need of financial support.
Notably, there will be winners and losers among both legacy banking organizations and fintech firms. This brings the question: Which fintech firms are the best positioned for the future post-COVID-19 in Kenya?
Fintech firms by far proven to be more valuable than the banking institution even though banks stand a better chance in the digital transformation, which is already taking shape. The fintech firms have been having a strong reliance on investor funding, which is not guaranteed in the future, with the pandemic affecting its revenues by a significant percentage.
Fintech companies face various challenges in the wake of the pandemic, with 40% having less cash on hand and others not at a position to access credit.
Before the pandemic, very few fintech were making profits, hence a possible challenge to the sector. The volume of global fintech deals also already decreased sharply during the first quarter of 2020 – in February, transactions were down 22% on the year before.
So what does the future have in store for the industry? Enterprises making profits and those enjoying support from the banking sector have a higher chance of survival, while those in early stages may face hardships as competition for cash intensifies.
Will financial services thrive in an environment that forces consumers to switch to online channels? An innovative approach will play a key role in helping the sector respond positively to economic recovery.
Notably, fintechs emerged from the past’s financial crisis and therefore have a good track record for agile.
During such hardships, fintech are serving customers turned down by banking institutions due to their lack of collaterals or other factors. Considering that most of the SMEs have limited liquidity, time is of the essence.
The future is bright for digital solutions in the country. Banking institutions are facing financial hardships and hence making people opt for digital solutions.
Therefore, it is high time that many fintech proves their ability to their target customers’ ability, utilizing their advanced algorithms for the benefit of customers who need better money management, access to credit and benefits, digital identity services, and quick fund transfers.
With the current hardships, it is also the perfect time for investors to support fintech, whose services can increase customers’ financial well-being. Fintechs that go out of their way to support customers during this challenging period are likely to drive outsized growth post-crisis.
With the ‘new normal’, it is evident that digital services are the future hope and are vital than ever as the world is slowly turning to a digital globe.
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