It is evident that the COVID-19 pandemic has wreaked havoc on countless individuals, countries and economies across the globe. Its financial impact has caused a serious economic crisis in most regions, severely affecting our societies and how we go about our daily lives. Health concerns aside, the pandemic resulted in various dilemmas ranging from loss of income to mounting debt to an increase in unemployment, leading to financial distress for a lot of people.
From an economic standpoint, the several lock-downs, curfews and travel restrictions that were constantly imposed led to most economic activities of countries to come to a standstill, resulting in dire consequences. Though the severity and magnitude varied, the economic crisis is clearly evident, with most countries attempting to tackle the problem at hand preemptively and continuously.
Several approaches were taken by banks and financial institutions in a bid to address the ever-growing economic challenges. The adoption of digitalization and financial technology was a significant trend that could be observed, with most traditional businesses now seeking to explore options that they had not considered in the past. The introduction of digital banks can also be witnessed, along with the digitization of traditional banking services. Forbes states that the investment in digital initiatives will continue to grow, with 34% of banks now offering fully digital processes. Source
The popularity of cryptocurrency has also risen. The Edelman Trust Barometer Report states that the trust in cryptocurrency and other financial tools has been growing amongst the public during the pandemic period and this trend can only be expected to continue. Source
Digital lending facilities were also becoming more popular, seeing an increase in peer-to-peer lending platforms, which offered a more convenient and easier alternative to traditional bank loans.
Significant Changes in the FinTech Industry That Were Caused by the Pandemic
Card Payments Preferred Over Cash: Cash payments were more or less abandoned during the pandemic – due to convenience and safety reasons. Most transactions took place online, which meant that cash was hardly used.
Increase in Banking & FinTech Applications: Adjust’s global app trends report states that FinTech app sessions grew by a whopping 85% year-over-year in 2020 — and these numbers are continuing to surge in 2021. Source
More Support by Governments & Regulators: In order to help economies that were suffering, governments and economies were now being more supportive towards FinTech initiatives – by offering a number of helpful measures as well as relaxed policies to help the segment.
Overall Personal Loan Debt Growth: According to data from Experian, consumer debt rose to $323 billion on personal loans in the year 2020, an all-time high, up from $18 billion from 2019. This led to a rise in digital lending platforms that were becoming increasingly more popular.
What Post-Pandemic Trends Can be Expected for Banks and FinTech Institutes?
There are a number of trends and patterns in consumer behavior that can be expected even after the pandemic. Listed below are a few:
– A focus on P2P lending, invoice financing and crowdfunding can be expected. Despite the liquidity crisis during the pandemic that most FinTech companies are facing, there will be an increase in collaboration on the digital transformation between FinTech and the incumbent financial industry.
– Increased digital transformation and digitization initiatives is perhaps the most prominent trend that can be observed – with more and more companies and businesses choosing to adopt it.
– The demand for FinTech products can be expected to increase a lot, with more and more discounts, offers and better customer service being readily available.
– The B2B sector will also expand over time, given the momentum and popularity during the COVID period.
– Due to remote working and reduced dependency on fixed office spaces, the speed of FinTech product launches will increase – resulting in more frequent releases of higher quality.
– Contactless payments will be considered to be the new normal as governments and regulatory bodies will seek to modify existing policies in order to create a cashless society in the long run.
– The sheer volume of online transactions will rapidly increase, given the growth of ecommerce and contactless payments. This can lead to innovation in terms of personal authentication services to ensure higher security – such as biometric authentication.
– The demand for cybersecurity products and services will increase, given the growing amount of online interactions, remote working circumstances and limited physical engagement.
– Opportunities for tech start-ups will also increase, given the increased demand for FinTech products and financial services – leading to better digital abilities in the industry overall.
– Hybrid robo-advisory service integration can be another long-term trend
The Future of FinTech in Sri Lanka
A collective drive towards digitization and FinTech products across a number of industries can be expected in the country, following the pandemic. Due to this, an important thing to ensure that the technology required for global transaction networks, enabling easy regulation, monitoring and provisioning is readily available. Local FinTech companies are also showing a heightened interest in tapping into the country’s rural population – majority of whom currently depend on cash payments. In order to truly reach the goal of becoming a cashless society, the first step is to change the consumer behavior of this segment and help them make the shift towards the digital space.
How Has LoanMe Adapted During the Pandemic?
With the understanding that the pandemic caused a massive amount of hardships, LoanMe undertook various measures to tackle the challenges brought on by the pandemic, whilst safeguarding customers. From continuing to issue loans to customers with extension discounts during the pandemic to providing concessions once lockdown was lifted – LoanMe took steps to provide relief to customers and support their financial well-being.
Do reach out to us if you are facing any difficulty and find yourself incapable of making your payments – our agents are always at hand to discuss your financial journey together with you and help you understand what your options are.