Topic: Discuss how the Fintech industry has been affected by the Covid-19 pandemic

Investopedia has stated that “fintech is used to describe new tech that seeks to improve and
automate the delivery and use of financial services. At its core, fintech is utilized to help companies,
business owners and consumers better manage their financial operations, processes, and lives by
utilizing specialized software and algorithms that are used on computers and, increasingly,
smartphones”. Amidst the resurgence of COVID-19, a whole host of sectors in the economy has
been disrupted, with the Fintech industry being no exception. Indeed, some fintech firms are
grappling with shocks of COVID-19 pandemic, yet many are adopting new ways to tackle and save
their business.

In modern times, finance is undergoing a profound digital transformation. Digital technologies are
reshaping payments, lending, insurtech and wealthtech - a process that the COVID-19 pandemic has
accelerated. Specifically, due to the stay-at-home order and strict lockdown, everything has shifted
from offline to online, and the changing landscape of the Fintech industry is a vivid example. In
terms of payments, more and more cashless transactions are conducted. Parents have to conduct
online fee payments since social distancing policies hinders their movements. The number of
customers taking advantage of e-wallet and credit cards to pay for essential needs like goods and
services on e-commerce platforms witnesses a striking increase. In terms of the lending sector,
digital lenders startups have mushroomed as one of the most vital parts of the current financial
ecosystem, which was not the norm prior to the pandemic. They are inclined to operate outside the
traditional loaning structure of bank loans and offer consumer-friendly lending solutions, such as
Buy Now Pay Later services, sometimes even at zero interest. They aim at helping jobless people
who have a deficit in financial budget can purchase enough goods. In terms of Insurtech, there is an
increasing demand for health insurance policies since there has been decline for travel and vehicle
insurance with the travel industry severely hit by the pandemic (D. Nair et al., 2021). Digital
insurance companies like Acko, Artivatic, Policy Bazaar etc have seen surge in the demand of their
products as the companies devoted themselves in offering seamless purchase, disbursement and
claiming services with minimal interaction at competitive pricing. Apart from digital payments,
lending and Insurtech, COVID-19 also intervenes in the change of Wealthtech. According to a
survey on the Impact of COVID-19 on Fintech Industry (2021), wealthtech which contains different
segments such as digital discount brokers, robo advisors, personal finance management apps, etc
has reported a surge in the number of new accounts opened and the increasing volume of
transactions. For instance, the wealth management industry is seeing the rapid emergence of AI-
based financial advisors. While some gather basic information to make informed decisions, more
developed robo advisors use machine learning to get in-depth understanding of the investor profile.
Overall, the resurgence of Covid-19 and the development of AI and technology have actually
opened new doors for some Fintech sectors which used to be a strange topic to step into the
financial market, to create new and conversional solutions for customers and investors.

Unlike other economic sectors which are significantly disrupted by the outbreak of COVID-19, the
Fintech industry foresees a whole host of opportunities. Firstly, the digital transformation has
offered golden chances for Fintech companies to run their business when other firms are on the
verge of financial loss and bankruptcy. It is undeniable that COVID-19 has pushed a large number
of corporations into business shut. Baseline estimated business failure rate jumps from 4.5% to

 12.1% in 2020, without policy interventions (P. Gourinchas et al., 2020). However, the case is
opposite in terms of Fintech with most types of FinTech firms reporting strong growth for the first
half of 2020 compared to the same period in 2019 prior to the pandemic according to the press
release of The World Bank (2020). The reason stems from the unprecedented necessity of
technology in the social distancing situation. Daily activities which are undertaken directly and
physically now have to be done virtually and face-to-face to lessen human-to-human transmission.
When the pandemic hits, people really start paying attention to how literally they spend money and
people find that they don't want to touch cash and exchange cash. That is when technology is
needed to create online services such as cashless payments. Due to the increasing demand for these
services, Fintech companies such as Paypal, Square, etc have the motive to maintain their operation
while other types of entrepreneurs are struggling to survive in the stagnance of the entire economy
during COVID-19. Based on the report of MicroSave Consulting (2021), some FinTechs recorded
as much as a 30% increase in customers during the pandemic, with positive revenue growth as well.
Secondly, thanks to the “living” situation of this industry, Fintech employers manage not to suffer
from unemployment - a recurring issue to most workers in almost every industry when COVID-19
emerges. For job seekers, they are more likely to grab this golden chance to apply for suitable
positions. According to a survey conducted by Statista Research Department (2021), there were
10,755 Fintech startups in the Americans, making it the region with the most fintech startups
globally. Compared with the EMEA region (Europe, the Middle East, and Africa) and the Asia
Pacific Region, there were 9,323 and 6,268 such startups respectively. Last but not least, Fintech
enables consumers to be exposed to a plethora of new mediums of services such as telemedicine,
cashless payments, telebanking, etc to improve their living standards as well as keeps them away
from the spread of COVID-19 for their health safety. For example, last August, Vietnamese Prime
Minister Nguyen Xuan Phuc attended the launch of a remote medical examination and treatment
platform developed by Viettel called Telehealth that enables remote medical consultation and
remote surgery consultation to reduce patient overload at central hospitals and contact between
patients and doctors during the pandemic (Thuy, 2021). In general, without the invention of Fintech,
other traditional financial entities and employers cannot revive the economy and serve the daily
needs of human beings when pandemics occur.

In the post-Covid scenario, Fintech offers more and more golden opportunities to mitigate our daily
lives and the economy. Firstly, by leveraging new technology and its applications, we are able to
create scalable and sustainable business models. By using AI, advanced data analysis, blockchain,
etc, the Fintech industry has the potential to implement a green economy that meets ESG
(environmental, social and governance) criteria - an increasingly important goal for companies, a
goal that investors and consumers support. Banco Bilbao Vizcaya Argentaria, S.A., better known by
its initialism BBVA - a Spanish multinational financial services company based in Madrid and
Bilbao, Spain is a vivid example. As part of BBVA's Green Fintech Challenge 2021 and in
collaboration with the City of London Corporation, the UK Financial Conduct Authority (FCA) is
running a cohort in its digital sandbox to accelerate innovation and develop fintech project which
informs consumers of the sustainability of the products they buy, and helps find options that are
aligned with their needs and preferences (Vanessa Pombo Nartallo, 2021). Secondly, the outbreak of
COVID-19 offers Fintech companies chances to improve partnership strategies with other
conventional financial entities, which helps them gain benefits of capital, distribution, and
compliance infrastructure (Nader A. and Mohamed D., 2020). Last but not least, adopting financial
inclusion scenarios is a long-term merit that Fintech has gained thanks to the resurgence of
COVID-19. The economic confusion of the pandemic is shedding light on the importance of
serving individuals who are currently outside the financial system, both in developing and
2

 developed areas. According to the World Bank, there are 1.7 billion unbanked persons all over the
world. It is possible that COVID-19 may lead to major financial inclusion as a result of recent
government programs all over the world to help low-income households (Nader A. and Mohamed
D., 2020). Therefore, Fintech is the most suitable initiative for these people to improve their quality
of life. Overall, it goes without saying that Fintech's long-term impacts vary from enterprises,
human beings to the environment.

In conclusion, although Fintech hasn’t become the norm in some countries, COVID-19 pandemic
has made us realize that its potential impacts are undoubtedly significant for the quality and
sustainability of our planet. Furthermore, Fintech is rising amidst the non-stop development of
technology which grants people chances to take advantage of digitalization to invent more
astonishing masterpieces. Therefore, Fintech responds quickly to economic challenges and develops
creative consumer goods and services.
 
 
 

-The end-

 Reference list:

Bich Thuy. (August 09, 2021). Vietnam launches a Telehealth platform connecting all district health
facilities. Retrieved from
https://vir.com.vn/vietnam-launches-telehealth-platform-connecting-all-district-health-
facilities-86473.html

D. Nair et al. (April, 2021). Impact of COVID-19 On Fintech Industry. Retrieved from
https://www.researchgate.net/publication/
350920575_Impact_of_COVID-19_On_Fintech_Industry

Nader A. and Mohamed D. (October 10, 2020). The Dynamic Relationship between FinTech and
Social Distancing under COVID-19 Pandemic: Digital Payments Evidence. Retrieved from
https://www.ccsenet.org/journal/index.php/ijef/article/view/0/43980

Statista Research Department. (November 9, 2021). Number of fintech startups worldwide 2021, by
region. Retrieved from
https://www.statista.com/statistics/893954/number-fintech-startups-by-region/
#statisticContainer

The World Bank. (December 3, 2020). Fintech Market Reports Rapid Growth during COVID-19
Pandemic. [Press release]. Retrieved from
https://www.worldbank.org/en/news/press-release/2020/12/03/fintech-market-reports-rapid-
growth-during-covid-19-pandemic

T. Varma et al. (April, 2021). Impact of COVID-19 on Fintechs. Retrieved from

https://www.microsave.net/wp-content/uploads/2021/06/Impact-of-COVID-19-on-FinTechs-
India-1.pdf

Vanessa Pombo Nartallo. (September 24, 2021). This is how fintech can help implement a green
economy. Retrieved from
https://www.bbva.com/en/this-is-how-fintech-can-help-implement-a-green-economy/

Statista Research Department. (November 9, 2021). Number of fintech startups worldwide 2021, by
region. Retrieved from
https://www.statista.com/statistics/893954/number-fintech-startups-by-region/
#statisticContainer