Amidst the chaos of the pandemic, the Government-imposed lockdowns and the sinking industries of most of the countries of the world, there are a few important points we need to acknowledge. From major collapses in the aviation industry to a significant plunge in the stock market, there’s been a huge toll on various industries by the recently emanated pandemic. What started as a common case of viral fever in China rapidly grew to a colossal state potentially becoming this century’s worst pandemic till date. It started affecting the economy instantly with the shutting down of a major part of the aviation industry, giving the travel and tourism industry the worst hit, affecting various productions and commercial activities massively.
So how does the outbreak really affect the fintech industry?
It is quite evident that the spending patterns of consumers would drastically be affected because of the lockdowns and the need for social distancing. Namely, the aviation, travel and tourism, restaurant, sports and countless other industries are being hit mercilessly because of the outbreak. Most airlines have shut down their operations, grounding planes and has led to Millions of Dollars in losses, it is predicted that recouping such heavy losses would be a highly challenging task. According to https://www.statista.com/, economists predict that there would be at least 2.4% decrease in Gross Domestic Product in most of the countries.
Speaking of the fintech industry, major credit card companies like VISA and MasterCard estimate a plunge in revenue due to the fall in use of credit cards especially because of the fall in the travel and tourism industry since people are advised and, in some places, restricted from traveling anywhere. Starting from clothing to fine dining to flying and vacationing, there is very little revenue which is being generated and this will obviously affect spending patterns of individuals thus reducing revenue drastically.
On the brighter side…
Considering the social distancing and lockdowns in most countries, various businesses have opted to work from home and introduce a healthier and more sustainable work from home concept for their employees, apart from that Governments have been advising and encouraging their citizens to use online payment mechanisms to reduce the spread of the infection through currency notes and on a general note, promote the digitalization of their economies. Also, to mention, the online entertainment and the healthcare industries are some to name to be booming.
This could indeed be a catalyst for the fintech industry, as most economies are shifting to contactless payments, the overall dependence on software related to payments, loans etc. would increase thus providing opportunities for the fintech industry. With businesses striving to keep business operations as normal as possible, they would be looking out for alternatives to reduce contact and increase online operations and transactions definitively. Keeping online mobility and customer service in mind, businesses would find an increased need for fintech solutions, which in-turn creates better opportunities for fintech businesses.
On the bottom line, we need to understand the risks the outbreak poses to the industry and hedge them accordingly, considering the opportunities we have in hand, it sure is a lot to work on and develop. What makes fintech stronger is a good structure of data analytics and a foolproof fraud detection in any case. Visit https://trustcheckr.com/ to book yourself a demo!