The global fintech market was recorded at USD 111.2 billion in 2019 and is expected to grow at USD 325.3 billion in 2030. Fintech market size is expanding due to increased use of digital payments during the pandemic, arrival of new and advanced technologies, increased investment in blockchain technology, and aggressive growth of e-commerce businesses.

Fintech has recently gained everybody’s attention after the technological boom. It gained enormous popularity since banks started providing their services on online platforms. Another reason for the giant leap in the Fintech industry is because of digital currencies or cryptocurrency. Today, the biggest investors are gaining huge profits by investing in digital currencies. Online banking has made money transfers hassle-free and quick. A few years ago, nobody would have thought that fintech would shoot through the roof in terms of popularity and market value. Finance industry is an ever growing industry due to the rise in technological innovations.

What is Fintech?

In simple words, Fintech is an amalgamation of two fields i.e., Finance and Technology. It is an umbrella term used to describe technological advancements in the field of finance. Its aim is to improve the ease of use by automating financial services. Fintech aims to help both business owners and consumers in terms of management of finances. This technology has improved the quality of living by providing exquisite user experience. With one finger touch, you have everything within your access on your smartphones and personal computers. Fintech has its mark in various fields including banking, investments, cryptocurrencies, education, etc. It has such widespread applications that we use fintech even in our daily lives for online money transfers, making payments via mobile, and managing our cryptocurrency investments. 

Impact of COVID-19 on Fintechs

It is a trend of the market that businesses keep experiencing ups and downs. Many fintechs felt stressed during the unprecedented times of COVID-19. It was up to fintechs what they could do to improve their businesses. COVID-19 turned our lives upside down but it also gave us the strength to survive the toughest times. The pandemic made us all think bold and creative. All the businesses found their way to drive through this time and so did the Fintech industry. 

Major problem faced by the fintechs was the unavailability of sufficient funds. And fintech companies in their nascent stages were hit the hardest. Since fintech is a comparatively newer sector, it has a limited amount of resources. The startups were hit hard due to the emergence of the pandemic. One of the limiting factors in the fintech industry is the investment. Fintech organizations need a huge amount of venture capital funding to sustain in the market and to grow. Companies that got sufficient funds survived the market but others had to suffer huge losses due to the pandemic. The first half of 2020 was extremely bad for this sector in terms of growth and small fintech companies faced a downfall due to COVID-19.  However, increasing consumer demand brought a revolution in this sector. 

One of the best examples of fintech industry growth was online payments. Due to social distancing norms during COVID-19, people were bound to make touchless online payments. The pandemic made every business turn to online platforms. Digital financial services and e-commerce saw tremendous growth during the last two years.  

What improved fintech business during COVID-19?

This COVID era shifted public interest from traditional mode of payments  towards modern digital payments. People’s change of interest worked best for fintech companies. The use of online payment modes was encouraged due to COVID-19. Every organization was forced to use online modes of communication and e-commerce to deliver their services. Work from home, online schooling, telemarketing, and telebanking changed the outlook towards fintech companies. These organizations managed their finances through fintech platforms while lockdowns were imposed. Revenues boosted as the customer base increased for e-commerce. Even students were using online platforms for making tuition fee payments. Cashless transactions became a thing during these two years. 

Enhanced cybersecurity such as biometric security systems also played a vital role in gaining the trust of customers. Various effortless modes of making payments have come to light, transactions via scanning QR codes, payments through voice recognition and many such services have revolutionized the fintech market. 

Another transforming feature of digital payments is Autonomous financing. Autonomous financing allows users to make hassle-free bill payments on time. Monthly bill payments have become a lot easier with the use of autonomous banking which pays bills on its own. You don’t even have to worry about paying bills with fintech solutions. 

Although this sector like every other sector had to go through these tough times and they had to manage through all uncertainties that came in their way. They managed their way to raise the funds from investors and lenders to sustain their businesses. Some companies had to reduce the workforce in order to save their capital and as a result many people lost their jobs. Also during this phase, Fintech startups were forced to shut down due to lack of funding. Others played smartly and planned their strategies according to the situation. The pandemic boosted the interaction between consumers and Fintech business providers. This resulted in increased customer outreach due to digitalization, loan collections, and credit underwriting. 

Fintechs adopted a very creative way to increase their consumer base. They offered small investment options to their average income customers. This strategy helped Fintechs boost their customer base. They changed the way they were offering services and products to their customers. Their outlook got aligned with  the needs that were generated due to the pandemic. They started providing services like delivering essential items, groceries, and medical supplies causing a huge increment in terms of digital payments and online transactions increased exponentially over these years. Some fintech companies started offering micro-loans and others focused on liquid funds that can be withdrawn any time the user wants. They also introduced premium policies at low costs that are affordable. 

Furthermore, the companies accelerated their performance to make their applications more user-friendly. Nowadays, customer support is extremely simplified with automation that employs query based solutions. These high tech software were able to meet the increasing demands of application users. Invention of chatbots is the best thing these digital platforms did. People were able to communicate with chatbots without the actual need to call customer care services. 

What held back Fintechs during the lockdowns?

There are a lot of requirements while going through the process of KYC. Customers are needed to present themselves with required documents such as canceled bank checks, identity cards, etc. Physical KYC was one of the things that held back users from going out during the pandemic. Restrictions such as social distancing and unexpected lockdowns imposed maximum hurdles in customer base growth. 

What else can be done to improve the performance of Fintech industries?

“Communication is the key”. Firstly, all organizations should communicate with their customers. Government policies differ in different nations for registering a Fintech startup. Surveys showed that users are not aware of the procedure to apply for government policies and packages. Government authorities should be more clear about their services towards these startups to provide them easy and remarkable experience. This will alleviate the cumbersome confusion between the government and fintechs. 

Secondly, the authorities must focus on cutting back the number of steps required in the process of registering a Fintech startup. The UK, which is a leader in digital financial services, provides a user-friendly experience by completing official formalities in the shortest time as compared to other nations. 

Following tips can improve the status of small fintech companies. Let’s have a look at them-

• Digital lending is a strong application in the sector of fintech. With increased customer demand and frequent transactions, this sector can experience new heights. 
• One of the best applications of fintech is online banking. It is the biggest market for fintech companies. Technology in banking can emerge as a blessing for such companies. 
• Digital customer savings is one possible way to survive in the market. Fintechs can offer high interest rates to consumers for retaining their funds. 
• Banks should be the ultimate goal for emerging fintechs. Banks employ digital solutions to fulfill consumer demands. This sector has a huge scope for growth of fintech companies. 

There’s always a light at the end of the tunnel which made Fintechs grow out of the pandemic. I hope this article was able to shed some light on the latest trends in the fintech industry. 

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