Over the past few months, the COVID-19 pandemic has changed the face of the industries worldwide. As global productivity is still recovering, we are facing an unprecedented economic downturn that will affect the financial stability of individuals and businesses for months and years to come. Although short-term recovery plans will help many to survive the fallout, it will take a long-term plan for employees and enterprises to flourish in the post-COVID scenario. In this new normal, robust finance app development services will be a lifeline for many individuals and enterprises. Companies that offer digital financial services, also known as FinTech, can turn this adverse situation into an opportunity. FinTech must be prepared not just to meet this increased demand but also to scale up their IT infrastructure while adapting to the new digital landscape.
5 Major Impacts of COVID-19 on the FinTech Industry
When planning to invest in financial app development or bank app development services, you should consider the following impacts of COVID-19 on the FinTech industry in order to prepare beforehand for meeting the growing demands of the tech-savvy users.
1. Accelerated Momentum for Survivors
According to the market intelligence platform CB Insights, speculator looking forward to fintech in Asia has been least in the first and second quarters in 2020 since the finish of 2016. It is an immediate impact of the COVID-19 pandemic, which has put businesses at risk. Limited access to capital is going to attract only a few players to close down, leaving the businesses to more prominent and grounded organizations.
Newbies are battling as Sequoia Capital conveyed a warning that it would require at least three to four quarters to recover from the COVID-19 emergency.
Drawn out vulnerabilities are soon going to reduce the number of fintech new companies, thus offering momentum to the organizations ready to adapt up to the difficulties.
However, the new players will consider it to be difficult to keep pace with the rapid changes. Amidst all the vulnerabilities, there is still an opportunity for them as even the most prominent players may become more fragile amid the COVID-19 pandemic flare-up.
2. Diminished Alternative Lenders
An agile scoring approach to the appraisal of the underserved fragments and emphasis on smaller loan amounts should put forth a shield for elective banks in progressing situations.
There has been a drastic decrease in salaries across small to large organizations and retail clients. This has eventually reduced utilization and raised defaults. Robocash Group research has found out that approximately 54% of borrowers will credit after lockdown restrictions are lifted.
Similarly, reimbursement events also diminished the income streams for banks. Consequently, lower requests and fixed prerequisites have minimized issuance and constrained companies to abort operations.
At that juncture, indebtedness of borrowers and financial vulnerability has led to an outpouring of speculators’ assets from P2P lending.
In Europe, the P2P lending dropped to 33% of the total volume of pervious months and constrained a few stages to crumple during March and April in 2020.
3. Growth of Digital Finance
Temporary lockdowns and home quarantine have led to the increased usage of online services from online shopping to conveyance, to entertainment, web-based features, and mobile payments.
People acclimated with the advantages of a digitally-driven world will probably continue to use it effectively in the post-COVID-19 landscape. Cashless payments are on the rise. Therefore, countries like the United Kingdom, Ireland, Germany, Egypt, Norway, Poland, and many other countries have raised cutoff points on the size of zero-contact payments. In present times, it has dramatically increased. Moreover, the urge of a cashless society is also accelerating the growth of the financial app development industry.
Another impact of the COVID-19 outbreak on the fintech industry is the regulatory progress. Eventually, the novel coronavirus has accelerated the selection of fintech and regulatory technology (regtech) in China.
Moreover, in South Korea, it encouraged the presentation of digital money law. Thus, although the global pandemic has been severe for the businesses, it has turned out to be a great opportunity for the fintech industry. And, this is the reason why finance app development services or banking app development services have been in demand during the pandemic and will continue to be in demand post-COVID-19.
So, if you’re thinking to invest in finance app development services, now is the right time to hire fintech app developers.
4. Fading Boundaries Between Banks and FinTechs
Traditional banking is gradually taking a gander at fintech. The inescapable digitalization isn’t the main explanation. The business has witnessed a decline in financial execution since a year ago. According to Bloomberg Intelligence, the typical expense to-salary proportion at the top European banks made up to 67% in 2019, which is the most remarkable rate since 2008. Profit for value dropped to the most minimal level in just three years at 8.7%.
The global downturn in the year 2020 has aggravated the situation. Lower earnings of the worldwide populace, the rising unemployment, and the financial vulnerability reduced the number and size of bank establishments and reason credits such as contracts, vehicle loans, etc.
Berenberg Bank projected that the decline in earnings of the European and American banks in 2020 would add up to 8.5%, while the profit would be 30% lower than it was expected to be a year ago.
In Asia, the situation is comparative as banks in Singapore are likewise anticipating a critical decrease in income. Therefore, changes in the existing working model and advanced technological changes are the methods for banks to overcome problems. Moreover, by investing in reliable bank app development services can help banks and financial services to address most of the issues.
It might likewise specify banks to give little credits and survey clients less officially, just as they start off obtaining fintech agencies. Interestingly, fintech is very dynamic in such a manner themselves, as they look out chances to strengthen the presentation.
5. Moving To Higher Personalization
The increased enthusiasm for telemedicine during the COVID-19 outbreak can evolve into a huge scope wonder. Probably, it might help business enthusiasm for organic information such as internal heat level, circulatory strain, etc. It will allow organizations as well as governments to improve assessment and gauge and impact how people think and act. Though it is a drawn-out pattern, with the help of huge 5G reception, it promises to move the buyer worldview significantly.
These evolutions will impact fintech benefits chief programming, focusing on and client procurement, credit scoring techniques, and so on. It will be one of the ways for obtaining more individual client offers and complete IT arrangements mechanized to the superlative conceivable degree. Within a solitary edge, they may combine arrangements from different fintech segments, just as serving different crowds.
The Last Say
The FinTech industry has been exploring various aspects since the outbreak of the novel coronavirus. It has also experienced a lot of ups and downs ever since where individuals have started to prefer digital banking facilities rather than traditional banking methods.
Finance app development is a smart choice as it not only is the new trend but also the future of the financial services sector. We, as a leading mobile app development company, have years of experience in rendering excellent financial app development services for the fintech firms. Our app developers keep an eye on the latest and innovative trends and help you develop a next-gen finance app.
Q.1. How can I earn from fintech applications?
The strategies that you can deploy to make money from your fintech applications include:
- Charging value-based or subscription fee
- In-app advertising and referrals
- Partnership with businesses
- Application Programming Interface (API)
To know more about how you can monetize your fintech app, contact our experts today!
Q.2. How Artificial Intelligence (AI) is helping banks and fintech startups?
The key benefits of AI in the fintech industry include:
- Lower cost and labor
- Quick and authentic decision making
- 24×7 customer support
- More secured platform
- Wealth and insurance policy management
- Proper fraud management
- Personalized user experience
Q.3. How does finance app development help?
In today’s digital age, individuals prefer digital banking facilities that can be accessed through their mobile phones. Fintech apps help companies, business owners, and consumers to efficiently manage their financial operations, processes and lives through their computers or mobile devices.
These applications connect banks or financial firms with consumers to make digital payments easier than ever before. Fintech apps serve a variety of purposes such as personal finance, money transfer, money lending, crowdfunding, investment, P2P (peer-to-peer) lending, etc.