Will COVID-19 create new opportunities for fintechs?
According to Deloitte, the COVID-19 pandemic may create new opportunities for some fintechs as the broader economy shifts from 'respond' to 'recover'
In the new report, Beyond COVID-19: New opportunities for fintech companies, Deloitte explains that many fintechs, like the wider financial services sector, have "gone into overdrive to respond to the crisis".
These companies, as well as other innovators such as insurtechs and proptechs, have focused on shoring up their capital and funding from investors and lenders says Deloitte.
They have also implemented cost-saving measures such as workforce reduction. There remains, however, uncertainty with fintechs "under stress on a number of fronts", Deloitte notes.
Innovation, relief and recovery
According to Deloitte, fintechs have several unique advantages that both allow them to better position the proposition in the current environment, and be prepared to exploit future opportunities.
They are, for example, adept and harnessing and using data, and focused on the provision of a seamless, customer-centric digital experience.
In addition, says Deloitte, the startup nature of many fintechs means they are unburdened by legacy technology or strategies. This allows for the building of platforms using a cloud-native approach that can take advantage of API ecosystems.
Fintechs are also better geared towards collaboration - using innovative tools and technologies to do - and more comfortable in creating lasting partnerships with others in the sector.
According to Deloitte, the these unique advantages may allow fintechs to find new opportunities in the long term.
The report states that fintech companies "may be forced to reexamine their mission and business models after COVID-19", adding that one key question may revolve around how to leverage existing and newly developed assets.
Social distancing, for example, lends itself to the mobile-first strategy of the many challenger and neobanks entering the market.
Similarly, says Deloitte, another outcome of COVID-19 may be the acceleration of partnerships with financial institutions that offer benefits such as capital and infrastructure, but increasingly seek innovative digital solutions.
The report also notes "huge potential in holistic financial services that integrate consumers' financial needs and behaviours, such as healthcare". Opportunities may also arise to partner with big technology firms on a global scale.
Other areas that fintechs may exploit in the future include:
- Playing an important role in the greater financial inclusion that COVID-19 may bring, including using a collaborative ecosystem to distribute benefits to the vulnerable
- Aiding in the rapid disbursement of government relief funds
- Empowering or better serving the gig economy, which is traditionally underserved by banks
- Harnessing the Internet of Things to improve payments
Read Deloitte's full report here.
Read our report on Deloitte's future of banking report here.
For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.