The Covid-19 pandemic continues to create economic uncertainty worldwide and several financial technology (fintech) companies have started to realign their growth strategies, with some fintechs at the forefront of seizing new opportunities, while others need to reconsider their efforts to stay relevant to the market, says business data and analytics company GlobalData senior fintech analyst Ayushi Tandon.
The current requirement in the financial services industry is to navigate through the uncertainty caused by the Covid-19 pandemic. Fintechs that have invested in digital systems across operations such as claims processing, online trading, aggregator models, personal finance and mobile apps are likely to have gained customer confidence. Such companies have provided customers more convenience in accessing loans, investment planning, account opening and managing finances, she says.
“New fintech models will evolve because of the changing customer banking needs. This evolution has the potential to slowly transform traditional players in financial services into new age fintechs. Companies that respond well in terms of increased investments, partnerships and acquisitions promoting digitisation can expect to see better success in the new normal,” Tandon states.
A recent study by GlobalData’s Disruptor Intelligence Center using its Fintech Landscape Analytics database reveals how various fintechs have taken advantage of the pandemic to build their brand, she notes.
"For example, US banking and insurance provider United Services Automobile Association understood the general mandate is to simplify and digitise. It invested in customer-centric digital transformation and used the crisis to accelerate those efforts. The company digitised the processing of claims by including photos and images, and then using these images to calculate the cost of damage rather than having a person inspect the damage."
US application programming interface-infrastructure provider Plaid, meanwhile, is helping lenders to accelerate approvals for emergency government loans for small businesses trying to survive the Covid-19 slowdown. Plaid helps lenders to quickly pull payroll data of customers, who are new to a particular bank, thereby reducing the time taken to disburse the loan from days to minutes, she adds.
Meanwhile, US stock-trading online application Robinhood witnessed a significant spike in the number of new stay-at-home investors owing to its intuitive user interface that quickly captured the interest of Millennials, who are mostly first-time investors. This helped it to gain popularity rapidly and set a new way for commission-free trading. The company saw three-million new accounts in the first quarter of 2020.
"UK fintech Thought Machine's Vault cloud banking platform is being adopted by various banks and fintech companies to build new products and improve the onboarding and overall customer experience. For example, London’s neobank Monese adopted Thought Machine’s Vault as a part of its infrastructure digitalisation strategy to unlock new features and capabilities for its customers, enriching their experiences," Tandon points out.