The Financial industry has seen high prosperous growth in recent times due to the rise in innovation and expansion of technology in almost every aspect of the business ecosystem. One important part of it is the FinTech segment. Starting with banks, it has given shape to various other financial areas such as insurance, investments, and financial planning.
However, the world has changed after the unfortunate expansion of deadly and infectious coronavirus across the globe. All business worlds are reeling under its pressure and FinTech application development has come to a halt.
The current COVID-19 crisis has put the whole of the banking (and financial) infrastructure under stress. Some questions raise the concern: What will be the future of FinTech post-COVID-19? How will changes be made in FinTech industries after the given pandemic will get over?
To answer the above-given question, there arises a need of creating a strong capital foundation for offering more personalized FinTech software solutions to the customers. It will help not only in the present but will also set a path for success in the future digital world!
In the given guide, there will be a detailed explanation about some essential steps that will be taken by the FinTech companies to stay relevant post-pandemic, and where the ‘new normal’ will become the order on which FinTech will operate thereon.
What is FinTech?
FinTech is a combination of two concepts- Financial + Technology. It describes the given new technology that is in the continuous procedure of improving, upgrading, and automating the use and distribution of the financial services. With the help of it, FinTech app development is available for proper management of the financial operations and processes by the business owners and companies alike.
Initially created to provide financial services, it now covers various financial activities like fundraising, education, investment management, retail, banking, and many more. Moreover, it also plays a pivotal role in the usage and development of a new type of currency (or we can say cryptocurrency) like Bitcoin.
Nevertheless, the arrival and rapid expansion of coronavirus has created a wide gap in the company-consumer relationship. The next stage will be on how COVID-19 has severely impacted the working of FinTech apps.
Effect of COVID-19 on FinTech
The ongoing COVID-19 pandemic has made every industry suffer and even financial industries are not spared from it. Since FinTech came into existence from only the last decade; there have been limited options for the industry as it has a limited resource pool to come out unscratched post-pandemic.
What’s more, the FinTech industry is still dependent on the relief packages provided by the government. Besides, their business also depends on venture capital funding that helps them to retain their employees and help in the creation of a working plan to always be on forwarding mode.
A recent report indicates that there has been a significant decline in the funding trends for the FinTech industry. Reports from CB Insights reflects “quarter over the quarter” falling of FinTech deals worldwide. Besides, it also reveals that global deals to FinTech companies have slash continuously for eight straight months that has made matter worse than what has been thought.
What’s next? Experts are asking FinTech organizations and startups to take immediate actions to lay more emphasis on their cash flow management and balance sheets to remain relevant. The research also signifies a solid fact that there will be a reduction in business and consumer spending, which will result in less transaction-based revenues.
Thus, a FinTech app development company should focus on serious financial challenges waiting at their doorstep and focus on ‘new normal’ to reduce costs and remain sustainable in this difficult period.
The New Normal for FinTechs
Previously, ‘old normal’ for FinTech implies how much customers the financial institutions have with them. But in the present real world, ‘new normal’ implies that the customers are someone who can pay for the products and services.
For FinTech companies, the ‘new normal’ defines the key success metrics depending on the quality of producing the goods to the customers appropriately. Furthermore, a new wave of FinTech- the Neo banks- have poised to become a new normal. Why?
It is because they have become the best alternative to the traditional banking model and have magnified the competition in a great manner. Moreover, new banks have become a new-age interpretation of all the financial services (banking services also).
During the COVID era, it has come as a boon for the financial company as they are digital-only financial service providers and does not require any physical presence. They come with processes that work in digital mode and can be accomplished through either website of the given bank or just from the banking app.
Another ‘new normal’ is a frequent change in the role of intermediary. Gone are the days when consumers have to get availing their financial services through intermediaries (like advisers or brokers). Now, during the given pandemic, they perform their financial duties using digital mode and have negated the importance of intermediaries to a great extent.
After getting information about the ‘new normal for the FinTech sector; the time has arrived to focus on the facts that will help FinTech to evolve effectively after COVID-19.
COVID-19 challenges in the FinTech Sector
With more and more people opting for digital financial services, it is prudent that the FinTech sector will benefit the most. However, COVID-19 has created several challenges for the given sector that has put a brake on its efficient working.
Here, there is a description of some of the challenges faced by FinTech companies and how they are overcoming it:
I. Data Privacy & App Security Challenges
With the ongoing pandemic, people are availing of their financial services online. Due to it, there has been an increase in online threats to their data raising ring bell for FinTech to improve its services. Thus, financial management is creating apps to make breaching security difficult with providing better security features.
II. Funding is becoming more & more difficult
For various FinTech startups, securing funding during the pandemic is becoming a nightmare. It is happening because investors are treading cautiously due to instability in the economy. To stay relevant, FinTech companies have tightened their lending standards in respect to loans offering to small enterprises.
III. Customer Lack Personal Touch
Today, people are living in uncertain times. Even with showcasing their digital capabilities, FinTech companies lack a personal touch as customers need to interact personally to solve their financial problems. To cope up with it, companies are sending personalized messages and organizing video-seminars to remain in touch with their clients.
IV. Change in Business & Revenue Models
The economic slowdown is everywhere and has resulted in high-interest rate cuts. Due to it, companies are forced to think about their revenue models such as opting for workforce reduction and pay cuts to stay up-to-date the economic pressure.
How will the FinTech industry evolve post-COVID-19?
The one positive aspect of COVID-19 is that it has accelerated the yearning of consumers toward technology reliance. The given scenario will not go immediately in the future and will pave way for the digital transformation to enhance the future prospect of the financial organizations.
Various research works have shown that the Global FinTech market is expected to grow around 20%. Moreover, it will also witness the progressive growth of $305 billion even by 2025. What does it reveal? The given fact reveals the golden words much to the delight of financial enterprises- “The future of FinTech app development companies, post-COVID-19 is bright.”
Likewise, new technologies such as AI, ML, Blockchain, and IoT will play a crucial role, and shaping the FinTech website development post-COVID-19. So, some underlying services will be extremely essential for the smooth operation of FinTech companies in the current as well as, post COVID-19 situation. They are:
A. Focus on Developing Customer Trust
Developing customer trust is a must, and FinTech companies and startups must fill the gap of showing their customers a virtual face to solve-out customer’s concerns when they opt for a digital model of financial services. Besides, continuous engagement with customers will enhance their reliability among their customers.
B. Successful Cloud Adoption
The current pandemic has forced most of the FinTech enterprises to migrate their current apps via the cloud for ensuring secure access by the customers through multiple platforms. Cloud adoption is a cost-effective method that responds quickly to changing markets and allows companies to offer a flexible solution to meet the growing demand of customers.
C. Boosting Overall Security to Cyber Attack
With the widespread prevalence of COVID-19, there is a certain acceleration of digital transformation. However, it has also increased the unavoidable risk of enhanced cyber-attacks. FinTechs have come with more security features to manage the customer data and make it more immune to cyber and phishing attacks.
D. More Focus on Improving Communication
Due to the loss of businesses because of the pandemic, most of the FinTech enterprises are focusing on working with reduced staff. So, they are focusing on communicating new mediums such as chatbots to solve and address the grievances of their customers.
Opportunities for FinTech Companies after Post-Pandemic
Even the pandemic has brought a vast number of challenges to FinTech organizations; it also comes with an ample number of opportunities that will be beneficial for them after post-pandemic. Some of these opportunities are presented below:
a. The surge in Technological Innovation, Faster than ever
Because of the coronavirus crisis, most of the activities have come to a halt. Nevertheless, the given period also witnesses large-scale innovation, due to which the FinTech management have been able to use advance technology to seek quick solutions.
What’s more, it has presented an opportunity for various industries to take the help of new agile solutions so to offer the market with affordable products and services. Furthermore, it will increase the collaboration of FinTech companies with other financial institutions (such as banks) to create unique ideas to solve financial issues faced by the customers.
Thus, an opportunity is waiting to be seized by FinTech companies to pave way for the customers in becoming more digital and volatile. A win-win situation for both!
b. Greater Prominence for Robo-Advisory Firms
In recent years, there has been an increasing demand for Robo-advisory companies for offering well-quality user experience as well as, wealth management advice at reasonable prices. Besides, widespread instability in the market due to COVIID-19, there is a great surge in the request for Robo-advisors among business-minded people for getting access to investment solutions and in-depth market analysis.
c. Rapid Digitization with more Investors Funding for it
There is no doubt that the given crisis will end up benefitting the FinTech sector enormously. Why? The reason is that the COVID-19 has changed the way of working of the people, where digital-only service will become the new norm in the financial industry. It has created a new opportunity to utilize technologies such as AI and big data. In turn, the money of investors is secured and results in increased funding for the FinTech companies.
d. Mobile App Payment will Dominate Future FinTech Payment
The current pandemic has made mobile app payment immense popular among people. Moreover, a new source of income is being accessed by FinTech companies. Not only it is getting widespread support from the government, but it has also allowed companies to get concessions in their tax return from them.
e. Customer-Centered Initiatives will Delight Customers & Business Partner Alike
The business world is witnessing the toughest time and so the new industrial trend is to give top-most priority to their most prized possession-‘customers’. Thankfully, various FinTech enterprises have taken their step towards it by offering free investment advice to their clients. Also, they are waiving off transaction charges for paying hospital bills or donation to charity to win the heart of the common people.
Wrapping Up
There is a saying among the financial business circle-“Future of FinTech has never been so optimistic.” Nevertheless, everything is going to change soon!
Though the global pandemic has posed serious challenges for FinTech companies, yet it has compelled them to reexamine business activities and device new ways to come out strongly in the future.
During ongoing coronavirus crises, financial digital tools have become more apparent. Furthermore, customers now are opting for digital financial services to get access to low-cost, secure, and contactless financial solutions without visiting any office.
So, FinTech application companies are coming out with some innovative FinTech solutions to meet the customer’s demand and thrive in the financial market for a longer duration.
Therefore, there is no doubt that post-COVID-19; the FinTech industry will be the first to take initiative to kickstart the global economy and make the world to be ready for a better future.
