In 2019, 64 percent of global consumers used a fintech service. Then COVID-19 hit.
Due to social distancing measures, most face-to-face transactions have dropped off. What does this mean for the fintech industry? Here are four indicators that fintech will not only survive this crisis but will also see accelerated growth as well:
#1 – A sudden acceleration in all things digital has given fintech even more permission to play.
COVID-19 has drastically and rapidly changed how we interact with each other. This, coupled with the associated economic slowdown, has created the opportunity for fintechs to rise to the financial challenges we all face.
Never has the world been more open to the innovative solutions offered by fintech. This was powerfully demonstrated in early April when PayPal became the first non-bank to be approved to administer small business loans via the US Small Business Administration’s Paycheck Protection Program.
#2 – Fintech apps have seen increased user engagement.
According to Forbes, the US saw “35% growth in time spent in finance apps overall from the week of December 29 to [March 15, 2020].” In addition, “Japan and South Korea have also seen phenomenal growth in time spent [in] finance apps at 85% for the same time period.” By reviewing examples of 2020 usage and industry changes, we see that fintech is well-poised to become even more essential to daily life.
#3 – Increased need for verification.
With the US Federal Reserve cutting interest rates to almost zero, homeowners are looking to refinance. However, growing unemployment rates have increased risk for lenders. Mortgage companies need real-time insights through consumer-permissioned data. They also need to provide their customers with an engaging digital experience, which is quickly becoming the new normal. In response, they may turn to data access providers like Finicity for digital employment, income, and asset verification.
#4 – Fintech grows in uncertain times.
The rapid rise of modern fintech traces its roots to the 2008 global recession. Consumers lost trust in the financial services industry, and new challengers arose to address marketplace concerns. Born out of adversity, “fintech is an industry that thrives when there are specific problems to solve.”
While the full effects of COVID-19 remain to be seen, these four indicators suggest that this economic situation will continue to drive significant interest in innovative financial services. Out of necessity, customers are seriously exploring digital tools available via traditional financial firms, as well as new entrants. This exploration will quickly become a habit, leading to permanent adoption of digital financial experiences. Increased customer interest means the services that solve the financial problems of today and tomorrow are well-poised to enjoy success in the post-socially distanced world.