The COVID-19
pandemic has had a significant impact on the financial industry, hastening
global fintech trends. For several years, fintech has been transforming the
financial industry, but the pandemic has accelerated this process, resulting in
new innovations and changes.
In this
article, we will look at how COVID-19 has accelerated global fintech trends.
The rise of
contactless payments is one of the most significant fintech trends accelerated
by COVID-19.
As consumers
have become more concerned about the potential spread of the virus through
physical contact, the pandemic has resulted in a significant shift toward
contactless payments.
As a result,
contactless payments, such as mobile payments and digital wallets, have seen a
significant increase in adoption in many countries.
In the United
Kingdom, for example, the number of contactless payments increased by 12% in
2020, while in the United States, the number of consumers using contactless
payments more than doubled during the pandemic.
This trend is
expected to continue even after the pandemic is over, because consumers have
grown accustomed to the convenience of contactless payments and are unlikely to
switch back to traditional payment methods.
Online
Banking and Digital Banking
The pandemic
has also increased the use of digital banking and online services. With
lockdowns and social distancing measures in place, consumers have had to rely
more than ever on digital banking and online services.
Many banks have
reacted to this trend by expanding their digital capabilities, such as offering
online account opening, digital wallets, and mobile banking apps.
For example,
mobile banking app usage increased by 26% in the UK during the pandemic, while
new mobile banking registrations increased by 200% in the US.
This trend is
expected to continue, as more consumers become accustomed to the convenience
and flexibility of digital banking and online services.
Apps
for Robo-Advisory and Investment
Another trend
accelerated by COVID-19 is the use of robo-advisory and investment apps. Many
people have turned to investment apps to manage their finances as they work
from home and spend more time online.
During the
pandemic, demand for robo-advisory services, which use algorithms to provide
investment advice, has skyrocketed. Investment apps like Robinhood have seen an
increase in usage, with many new users signing up to trade stocks and other
securities.
This trend is
expected to continue as more consumers gain confidence in using technology to
manage their finances and seek out more affordable and accessible investment
opportunities.
Verification
of Digital Identity
The adoption of
digital identity verification solutions has also been accelerated by COVID-19.
As more people work remotely, there is a greater demand for secure and
dependable methods of identity verification.
During the
pandemic, digital identity verification solutions such as biometric
authentication and facial recognition have seen increased adoption. These
solutions provide a more secure and convenient alternative to traditional
identity verification methods, such as in-person visits to a bank branch.
This trend is
likely to continue as more businesses and financial institutions seek ways to
securely verify their customers’ identities in a remote environment.
Opportunities
and Challenges
While COVID-19
has accelerated global fintech trends, it has also presented the fintech
industry with both challenges and opportunities.
One of the most
difficult challenges for fintech companies is adapting to rapidly changing
circumstances. The pandemic has created significant economic uncertainty,
making it difficult for fintech firms to plan for the future.
Simultaneously,
the pandemic has provided opportunities for fintech firms to innovate and
develop new products and services that meet the changing needs of consumers and
businesses.
Another
challenge for the fintech industry is ensuring the security and dependability
of their products and services.
With more
consumers relying on digital banking and online services, cybersecurity
measures to protect against fraud and cyber attacks are becoming more
important.
Fintech firms
must also ensure that they are in compliance with regulatory requirements in
each country in which they operate.
As fintech
continues to disrupt the traditional financial industry, regulators are
increasingly focused on ensuring that fintech companies follow the law.
Fintech
growth drivers
Fintech’s
growth and the overall boost in the digitalization in finance seen throughout
the pandemic can be connected to numerous drivers, both seen on the supply and
the demand side. We’ve highlighted some of the most important ones:
Supply-side
drivers
In what
concerns the supply side of things, the main drivers were:
The support
measures during the COVID-19 pandemic: there were numerous incentives, both
fiscal and monetary, which managed to help supporting the economy.
Institutional
transition into the digital world: both newcomers and established financial institutions
found themselves in a position where going digital was nigh mandatory given the
relentless consumer demand for digital alternatives.
Regulatory
frameworks: Fintechs saw fewer obligations in terms of financial regulation
which meant that new entrants could find their way and establish themselves
easily.
Demand-side
drivers
As for the
demand side, drivers were simple:
A shift in
payment habits: digital and contactless payments began to be the new standard
of payments for customers worldwide.
Convenience and
overall mobility issues: clients simply became unwilling to go to the bank
given the pandemic. This meant that financial institutions had to meet the
shift in demand type and search for better processes which addressed customer
convenience.
Additional
savings: household savings and bank deposits were high while interest was low.
Wrapping
Up
COVID-19 has
had a significant impact on the fintech industry, hastening trends such as
contactless payments, digital banking, robo-advisers, and digital identity
verification. Consumers and businesses have grown accustomed to the convenience
and flexibility of fintech solutions, and these trends are expected to continue
even after the pandemic is over.
While COVID-19
posed challenges to the fintech industry, it also provided opportunities for
innovation and growth.
Fintech firms
must continue to adapt to changing conditions and ensure that their products
and services are secure and meet regulatory requirements.
As the fintech
industry continues to disrupt the traditional financial industry, it is
critical for consumers and businesses to carefully weigh the benefits and risks
of using fintech solutions and to conduct thorough research before implementing
new technologies.
Overall, the
impact of COVID-19 on fintech trends will continue to evolve over the next few
years, shaping the financial industry’s future.
The COVID-19
pandemic has had a significant impact on the financial industry, hastening
global fintech trends. For several years, fintech has been transforming the
financial industry, but the pandemic has accelerated this process, resulting in
new innovations and changes.
In this
article, we will look at how COVID-19 has accelerated global fintech trends.
The rise of
contactless payments is one of the most significant fintech trends accelerated
by COVID-19.
As consumers
have become more concerned about the potential spread of the virus through
physical contact, the pandemic has resulted in a significant shift toward
contactless payments.
As a result,
contactless payments, such as mobile payments and digital wallets, have seen a
significant increase in adoption in many countries.
In the United
Kingdom, for example, the number of contactless payments increased by 12% in
2020, while in the United States, the number of consumers using contactless
payments more than doubled during the pandemic.
This trend is
expected to continue even after the pandemic is over, because consumers have
grown accustomed to the convenience of contactless payments and are unlikely to
switch back to traditional payment methods.
Online
Banking and Digital Banking
The pandemic
has also increased the use of digital banking and online services. With
lockdowns and social distancing measures in place, consumers have had to rely
more than ever on digital banking and online services.
Many banks have
reacted to this trend by expanding their digital capabilities, such as offering
online account opening, digital wallets, and mobile banking apps.
For example,
mobile banking app usage increased by 26% in the UK during the pandemic, while
new mobile banking registrations increased by 200% in the US.
This trend is
expected to continue, as more consumers become accustomed to the convenience
and flexibility of digital banking and online services.
Apps
for Robo-Advisory and Investment
Another trend
accelerated by COVID-19 is the use of robo-advisory and investment apps. Many
people have turned to investment apps to manage their finances as they work
from home and spend more time online.
During the
pandemic, demand for robo-advisory services, which use algorithms to provide
investment advice, has skyrocketed. Investment apps like Robinhood have seen an
increase in usage, with many new users signing up to trade stocks and other
securities.
This trend is
expected to continue as more consumers gain confidence in using technology to
manage their finances and seek out more affordable and accessible investment
opportunities.
Verification
of Digital Identity
The adoption of
digital identity verification solutions has also been accelerated by COVID-19.
As more people work remotely, there is a greater demand for secure and
dependable methods of identity verification.
During the
pandemic, digital identity verification solutions such as biometric
authentication and facial recognition have seen increased adoption. These
solutions provide a more secure and convenient alternative to traditional
identity verification methods, such as in-person visits to a bank branch.
This trend is
likely to continue as more businesses and financial institutions seek ways to
securely verify their customers’ identities in a remote environment.
Opportunities
and Challenges
While COVID-19
has accelerated global fintech trends, it has also presented the fintech
industry with both challenges and opportunities.
One of the most
difficult challenges for fintech companies is adapting to rapidly changing
circumstances. The pandemic has created significant economic uncertainty,
making it difficult for fintech firms to plan for the future.
Simultaneously,
the pandemic has provided opportunities for fintech firms to innovate and
develop new products and services that meet the changing needs of consumers and
businesses.
Another
challenge for the fintech industry is ensuring the security and dependability
of their products and services.
With more
consumers relying on digital banking and online services, cybersecurity
measures to protect against fraud and cyber attacks are becoming more
important.
Fintech firms
must also ensure that they are in compliance with regulatory requirements in
each country in which they operate.
As fintech
continues to disrupt the traditional financial industry, regulators are
increasingly focused on ensuring that fintech companies follow the law.
Fintech
growth drivers
Fintech’s
growth and the overall boost in the digitalization in finance seen throughout
the pandemic can be connected to numerous drivers, both seen on the supply and
the demand side. We’ve highlighted some of the most important ones:
Supply-side
drivers
In what
concerns the supply side of things, the main drivers were:
The support
measures during the COVID-19 pandemic: there were numerous incentives, both
fiscal and monetary, which managed to help supporting the economy.
Institutional
transition into the digital world: both newcomers and established financial institutions
found themselves in a position where going digital was nigh mandatory given the
relentless consumer demand for digital alternatives.
Regulatory
frameworks: Fintechs saw fewer obligations in terms of financial regulation
which meant that new entrants could find their way and establish themselves
easily.
Demand-side
drivers
As for the
demand side, drivers were simple:
A shift in
payment habits: digital and contactless payments began to be the new standard
of payments for customers worldwide.
Convenience and
overall mobility issues: clients simply became unwilling to go to the bank
given the pandemic. This meant that financial institutions had to meet the
shift in demand type and search for better processes which addressed customer
convenience.
Additional
savings: household savings and bank deposits were high while interest was low.
Wrapping
Up
COVID-19 has
had a significant impact on the fintech industry, hastening trends such as
contactless payments, digital banking, robo-advisers, and digital identity
verification. Consumers and businesses have grown accustomed to the convenience
and flexibility of fintech solutions, and these trends are expected to continue
even after the pandemic is over.
While COVID-19
posed challenges to the fintech industry, it also provided opportunities for
innovation and growth.
Fintech firms
must continue to adapt to changing conditions and ensure that their products
and services are secure and meet regulatory requirements.
As the fintech
industry continues to disrupt the traditional financial industry, it is
critical for consumers and businesses to carefully weigh the benefits and risks
of using fintech solutions and to conduct thorough research before implementing
new technologies.
Overall, the
impact of COVID-19 on fintech trends will continue to evolve over the next few
years, shaping the financial industry’s future.
