While many FinTech firms could be ideally placed to leverage the coronavirus to their advantage, they still have much to do to capitalise on the situation.
You’ll get over 2.1 billion hits if you google “coronavirus has changed everything.” Scroll through the results and you’ll learn about how the pandemic might bring back trust in experts, how people plan to ditch gyms for home-based workouts, and even how the virus has altered the way we speak. And then we haven’t even mentioned the deluge of banana bread pictures peppering your feed every time you open Instagram.
The evolution of daily life can also be seen in the professional sphere. As countries around the globe introduced social distancing measures to protect their citizens, people quickly adopted new ways of working. From Zoom calls to Dropbox folders, people have fast become very familiar with different solutions that enable them to work from home. Additionally, remote working seems to be here to stay. Facebook, Twitter and Square are just three examples of major companies that have announced that they plan on making remote working a permanent fixture for employees after the crisis.
Understandably, the FinTech space has also been affected by the global healthcare crisis. For example, cashless payments are on the rise in the Nordics, the UK, Russia and many other regions across the globe as physical money has been identified as a potential carrier of the contagion.
Kidbrooke, the WealthTech company, is bullish about the FinTech industry’s chances to come out on top of the crisis. In a new blog, the company noted that many of the technologies other sectors are just opening their eyes to – such as artificial intelligence, machine learning and big data– have been in place in the FinTech sector for some time.
Nevertheless, Kidbrooke noted that adopting this technology also comes with several challenges. “Historically most, if not all, advice and wealth services could be described as inherently practical in nature,” the WealthTech firm wrote. “Now, firms must pay close attention to the holistic and emotional needs of their clients, in many cases making them their priority. If human relationships are to be sustained, then they need to become increasingly human in nature.
“The wealth managers of the future will need to attune themselves empathetically to what their clients really need from them. Tech and data innovation will continue to provide the platform for relationships that can grow in mutual value. It is now for firms on the front line to redefine their products and grab the new wealth management opportunities that are on the table. ”
Moreover, Kidbrooke suggested that while the flow of FinTech deals may have slowed down, investors still seem willing to inject their capital into the sector. “[The] deals signed signal that capital continues to be directed towards building the next generation of wealth,” Kidbrooke wrote. That being said, the British FinTech industry alone is expected to lose £1.4bn in investment because of Covid-19.
Even though raising capital could prove a challenge for many startups, it could also provide an opportunity for bigger firms in the FinTech industry. For instance, the UK challenger bank Revolut’s co-founder and CEO Nikolay Storonsky recently said he sees “a real opportunity” to acquire competitors – such as businesses in the travel aggregation industry – who are suffering due to the pandemic.
Kidbrooke also noted some other challenges on the horizon, one of them is the previously mentioned increased adoption of remote working solutions. It may have cut hours away from people’s commute, but it has also presented cyber criminals with new attack surfaces to break into businesses’ IT infrastructure. Sadly, many bad actors are leaping on this opportunity, with regulators around the world having warned about a jump in hack attacks, digital scams and financial fraud since the pandemic began. “Emergent cyber and Info-sec vulnerabilities must be mitigated quickly,” Kidbrooke said.
Add to that the fact that remote working means new compliance challenges and it’s easy to imagine that RegTech companies could have several opportunities from the coronavirus. This is something FinTech Global has written about in the past. You can find our story on the topic here.
“The [post-Covid-19] world we lean into will look very different from the one that went in,” Kidbrooke concluded. “This will create risk and opportunity even-handedly. The firms that will thrive will embrace the chance to deliver the next generation of digital wealth journeys.”
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