Which Fintech Areas will Benefit from the Spread of COVID-19
As many of the world’s citizens “sheltering in place” cash has been left on the sidelines and digital-only payment services have risen to the forefront. Companies that focus on everything from online lending to wage advances and new client onboarding say they can help get money to people faster and more efficiently. This can help individuals who have lost their jobs and quickly need money in their pockets, as well as a small business who desperately need loans to fend off bankruptcy.
Europe Sees a Huge Boost in Fintech
The spread of COVID-19 has prompted a surge in the use of fintech. The coronavirus has buoyed the use of fintech apps which has increased use by 72% in Europe, according to new research by deVere Group. This shows that a quick rotation for people who have been locked up due to the “shelter in place” orders in countries across the globe. The need for apps to make life easier, given the lack of face to face interaction, will continue until a vaccine is implemented.
Getting Unemployment Insurance Money
While nearly 10-million people filed for unemployment claims in the US in the last week of March and the first week of April, there are plenty of gig economy workers who are very concerned. The 2.2-trillion-dollar package passed by the congress has put some money aside for these individuals, but how can these people prove they were working. One of the most prominent examples of a fintech product that can quickly assist during these difficult times is COVID Credit. This is an online tool allowing the self-employed to certify their past income by sharing banking data.
There is a slew of startup fintech companies that are focusing on getting money directly to consumers. As the number of new unemployment claims grows, the need to get money directly to consumers has become a massive undertaking. Additionally, millions of small businesses are looking to receive loans to help them bridge the divide until the spread of the virus fades.
Lending in the UK has been setback by criticism. Meanwhile, several startups are mobilizing to widen the pool of firms that can lend to small businesses. Trade Ledger, a startup that provides digital lending technology, last week formed a fintech ‘taskforce’ to help firms overcome key hurdles for business lending.
It’s Not Only Small Companies that are Expanding into Fintech
While there are thousands of small companies that are racing to help find a solution to the “new normal”, Swift, the international payments network announced a major push to bring instant payments to small and medium-sized enterprises. These are the companies that have been hit the hardest by the spread of COVID-19. Swift plans to go head to head with Visa, Mastercard as well as emerging fintech companies like Ripple. Ripple uses XRP has its cryptocurrency, to send payments across a network.
The Bottom Line
The key takeaway is that fintech is needed as a “new normal” change the way people live. The use of cash has all but evaporated and fintech uses for transferring funds is taking hold. The need for products that will allow governments to quickly provide the necessary loans and grants to small businesses and individuals is desperately needed. Fintech companies are focusing on everything from banking to insurance and loans which will eventually help the people that need this the most.