How Innovative Fintechs Have Helped Alleviate the Impact of COVID-19
The COVID-19 pandemic is causing a dramatic loss of life worldwide and is continuing to strain public health significantly. But the impact COVID-19 has had on the global economy has also been just as damaging. In the US we’ve seen the stock markets suffer dramatic falls due to the outbreak, with the Dow Jones reporting its largest-ever single day fall in March. Small businesses have also been severely impacted, with Yelp data showing that 60% of business closures due to the coronavirus pandemic have now become permanent.
Yet, amongst all these difficulties, the pandemic has opened the door to new opportunities. For instance, lockdowns and social distancing have resulted in certain industries such as fintech seeing a surge in demand. But how exactly are Fintech companies helping during these difficult times?
In this article, we’ll explore three ways Fintechs are delivering innovative solutions to alleviate the economic shock of the COVID-19 pandemic.
- Swift Digital Banking Services
Due to banks being forced to close or limit their working hours during the lockdown, digital banking solutions took over. Many who previously relied on traditional banking services now had to make the switch to accommodate their financial needs.
Digital banks helped encourage this switch by reducing fees, changing qualification criteria, and easing payment requirements. The introduction of new products and services were also launched to make the switch more seamless.
According to FIS, the pandemic resulted in over 45 per cent of Americans changing the way they bank. This shift to digital will remain even after Covid-19 as more people start to realise the increased convenience and effectiveness digital banking solutions offer.
- Flexible Online Lending
Around the world, many people still lack access to financial services and online banking. This has created a problem for governments wishing to provide financial assistance to the unemployed and small businesses due to COVID-19.
However, fintech companies have been vital in helping solve this issue. For example, in Asia, fintechs are helping SMEs stay afloat by offering new underwriting platforms to allow lenders to provide financing for small businesses. Whilst in the US, PayPal and other fintech companies have been able to extend loans to small businesses.
Fintech companies have played their part in extending financial loans and services to those who need it most. Without this support, many people would have struggled even more to deal with the economic shock of COVID-19.
- Promoting Financial Inclusion
The economically underprivileged have been the ones who have been hit hardest by the lockdowns everywhere. However, fintech is playing an ever-more vital role in alleviating the unbanked and underbanked populations’ economic struggles.
Whether it’s unlocking new finance sources or making online payments more accessible and affordable, fintech solutions have been invaluable to low-income groups during the pandemic. In India, we’ve seen the fintech startup Eko trying to create “human ATMs” out of anyone with a mobile phone and a little cash. Whilst in Kenya, fintech companies like M-Pesa, have been waiving fees to help extend financial services to vulnerable groups.
Solutions such as these have been key in helping alleviate some of the financial hardship caused by COVID-19.