The deadly coronavirus outbreak originated in Wuhan, China, has left the world ina tragic state with over 22,611,341 active cases and 791,678 in 203 countries. And while the focus is entirely on slowing the spread of this life-threatening virus, it is also important to acknowledge that the financial market has started to plummet. With mass quarantines and/or complete lockdown in many countries including, everything from local businesses to global trades has taken a hit.
Financial markets, especially, have seen the worst price movements in decades. And while the economic free-fall has slightly been controlled at the moment, the recovery largely depends on:
- If the virus will continue to spread,
- And how the governments will respond to it if it does.
But for now, the situation isn’t looking good.
The FinTech industry, however,can take a few steps to stay afloat and benefit the population at the same time. But before we get into what they can do, let’s first discuss the negative impacts of COVID-19 outbreak on the economy.
A Drop in Transaction Volume –With mass quarantines and lockdowns announced by the national leaders from across the globe, the volume of transactions has certainly dropped. Social distancing has led to cancelled trains and flights, closed hotels, closed stores, and a negative impact on consumer spending. Both Visa and MasterCard have reported a decline in their sales.And this has affectedbusinesses, especially the small scale businesses that are struggling to keep running.
Drop in M&A Deals –Venture firms are rethinking their investments which would lead to a drop in the volume of mergers and acquisitions. Moreover, venture firms are making significant fund-size cuts,which is affecting the start-ups that may be running on venture funding capital.
Lowered Interest Rates –Because of the affected spending and earning power, the Reserve Bank of India has cut interest rates. The decision is taken to cope with the new global recession. This will lead to reduced income from investors, business clients, and transaction fees.
What FinTech Industry Can Do
Bring Digital Innovation in Payments –The World Health Organisation is encouraging the use of contactless payment so that physical bills can be disinfected. So, FinTech companies can leverage digital innovation and move tocontactlesspaymentmodes.By banking on the current scenario, credit unions and FinTech companiescan use contactless technology to gain new customers.
Extend Personal Loans –The pandemic has been the onset of a global recession; people are continuously losing their jobs and struggling to keep the cash flowing. Moreover, small scale businesses are relying on loans, now more than ever, to keep running. But since the situation due to coronavirus has affected the lending decisions of government banks, personal finance institutions can offer easy funding through personal loans and earn loyalty.
As per Alex Malyshev, CEO SDK Finance, “Banks are likely to delay spending decisions to prepare for a possible downturn. This crisis gives opportunities to those who understand people’s needs and take leadership despite the risks.”
Considering the situation, personal finance institutions can use this storm to thrive. They can encourage transactions by making personal loans easier to get access to. And while this can be looked at with a profit point of view, it is a great way to genuinely help people.
Make Your Company Visible Using Digital Marketing –During this crisis, people are turning to the World Wide Web to look for funding options. And FinTech companies can be visible to potential customers by using digital marketing. They must understand people’s needs, come up with an infrastructure for better solutions, and market their solutions in a way that there are maximum conversions. Digital marketing initiativescan certainly result in great return on investment.
It’s also never been a better time to consider investing in content marketing. Thought telling your potential customers everything about your product is a bit like someone asking you for a one-sentence explanation of your product and you delivering a lecture instead. This is why fintech companies need to make it easier for people to understand the problems they solve. Some companies, like Genuinecommunications, do a great job helping fintech companies to produce great content without sounding boring.
While the changing market scenario can work to the advantage of Fintech companies, it is also giving traditional banks time to move to more convenient banking options such as branchless banking.
The entire world is suffering, and we can only hope that the situation is controlled as soon as possible.During this time, FinTech companies can take a step forward as explained above. In fact, governments are encouraging FinTech partnerships too, which means more business in the FinTech industry. The power can move from established companies to smaller FinTech firms if they understand the needs of people and become more visible.