The expansion of global Fintech companies has increased significantly over the years. Statistics show market value in 2018 was about $127.66bn. The value is expected to grow to $309.98 billion, with an annual growth rate of 24.8 percent by 2022. This growth is also accelerated by the introduction of Fintech Research Companies in the financial system. However, the steady growth has faced a global pandemic (Covid-19). This brings doubt of whether the predictions will be achieved by 2022.
Globally, all sectors are greatly affected by the Covid-19 eruption. This has brought down the economy and seen many people lose or close their jobs. It’s a devastating pandemic for many investments worldwide. Fintech research shows a 30 percent drop in the Fintech industry. It also indicates a reduction in the UK from $760m (2020) in the second quarter of the year, compared to more than $1.2bn in the same period in 2019.
Opportunities and innovation
A majority of banking institutions have had significant setbacks and are finding it challenging to pull it together. Traditional banks are withholding services such as loan disbursal, especially because many clients are finding it challenging to pay or pay on time. However, many Fintech companies are working through handling the finances quite well. They are demonstrating resilience and depending on the high levels of equity finance.
Fintechs are implementing remote working, a skill that enables Fintech to dodge the Covid-19 disruption. Financial technologies have reduced their cost of spending by reducing the workforce. A report from Beauhurst shows only one percent of Fintechs are severely affected by the Covid-19 pandemic. In comparison, 17 percent of other companies are highly affected by the pandemic.
Covid-19 has introduced new banking methods as many people are confined in their homes. This has reduced the need to visit the banks. Fintechs are experiencing demand as many customers are transacting online. The new digital financial services have significantly transformed the financial industry, and as a result, businesses are adjusting to the new Fintech system to fit the services.
Fintech has a history of innovating and working through hard global times. The change is also driven by high customer demands on product and service delivery. Organizations can take a cue from how Fintechs are willing and ready to provide solutions by implementing digital infrastructure to align with the current situation.
The Fintech development was created from the pandemonium in 2007-08 global financial crisis GFC. All the uncertain times have introduced innovations and investment plans. The Covid-19 is just another situation presented for the financial industry to innovate new investment measures.
The world is working its way around Covid-19 by introducing vaccines and physical measures to keep everyone safe. It is also healing from the economic fractures and focusing on more resilient sectors. Fintech is the first consideration for many financial institutions and businesses.
Reports from the World Bank show there are 1.7 million people globally without bank accounts. Fintech has ways of integrating them into the banking system as it allows users to transact using mobile apps without the need for a bank account. Fintech is also a significant program that should be incorporated with financial institutions, retailers, and government sectors globally.
Fintech is a way to democratize financial services by offering services in a transparent and accountable platform. Digital finance has also influenced other sectors such as the health sector. It has reduced the use of physical cash and implemented online transactions (e-wallets). Although physical cash was on the verge of diminishing, the Covid-19 situation helped to hasten the process.