For some the lockdown feels like it has been going on for months. For others, it has flown by. Yet in that short space of time we’ve seen an almighty response from fintechs to support the most vulnerable members of society.
Fintechs are agile by design, having been born out of a need for innovation in banking. This places them in a strong position to respond positively to the coronavirus outbreak. In a matter of days after the lockdown was announced, fintech providers created brand new solutions for customers, adapted and scaled existing solutions or made their services available for free.
Forbes has been monitoring which fintechs are offering free, discounted or accelerated services, with no less than 208 companies across 17 categories listed at the last count.
Examples of solutions provided include:
These responses align with the FCA’s latest business plan for 2020/2021, which emphasises the importance of preventing harm and protecting customers during this crisis.
The swift response from fintechs is testimony to the rapid growth of the industry in recent years and its growing strength in the financial services ecosystem today. This is partly driven by initiatives like open banking, which have enabled fintechs to request access to customer banking data for the first time and use this to launch better products and services.
The coronavirus outbreak demonstrates just how important innovation can be to a country’s banking system. People’s ability to access cash, earn a living and pay their bills and businesses’ ability to continue trading, pay wages and bills and access loans and investment have been severely disrupted by the virus.
On top of that, the lockdown is driving rapid changes in customer behaviour and an acceleration of existing trends. More customers are using mobile banking apps and online channels, ATM withdrawals decreased by 50% in March and customers are increasingly expecting a frictionless, technology-led service from their banking provider. The UK’s financial system had to respond and adapt quickly to the disruption.
Of course, the fintech industry is not without its own challenges in the face of a global pandemic. The sector has been lobbying the government for more support and on Monday 20 April, the Treasury announced a £1.25bn support package for innovative firms hit by the coronavirus.
With many fintechs focussing on rapid growth rather than profit pre-coronavirus, we are likely to see some casualties in the fintech space even with this government support. The availability of funding will no doubt still be a concern, and businesses will inevitably have questions for example about managing their employees, contracts and suppliers.
In this context, it is worth noting that innovation is also an important factor in business resilience, and the coronavirus really drives that message home. Organisations who are able to innovate, problem-solve and provide real value to customers will be the ones most likely to emerge from this crisis intact.
For more insights and advice, watch David Gardner participate in ProManchester’s webinar, What is the impact of Covid-19 on fintech?
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