By Rebecca Castellani
As the novel coronavirus continues to impose restrictions on our day-to-day existence, financial technology has become more relevant than ever. Reporting a staggering “72% increase in the use of fintech apps in Europe,” Forbes suggests the “long-term legacy of the coronavirus will be an increasingly digital and online society.” Here’s how the COVID-19 crisis makes the case for fintech.
MOBILE BANKING ON THE RISE
Historically, money-transfer apps and digital lending services have been perceived as a threat to traditional banks, but as branches are restricted to drive-up services or shuttered entirely, an unlikely alliance has formed. “The relationships between banks and fintechs are playing to each other’s strengths more than ever,” Sandeep Todi, co-founder of the payment provider Remitr, told Finance Magnates. “With banking partners having to connect remotely and experiencing the dependency for digital touchpoints, the need to [cater] to consumers’ needs wherever they are is more important than ever before. This is where fintech makes it possible to face crisis situations like this with agility.”
So has the choice of legal tender been affected by the coronavirus. According to MarketWatch, “Gold-buying apps, which allow customers to buy and use the precious metal for everyday spending, are seeing record volumes as investors flock to the safe-haven commodity amid violent market swings on fears of a coronavirus-fueled global recession.” Glint Pay, a multi-currency service, is reporting a 718% increase in clients purchasing gold since the outbreak of the virus.
HOW APPS HAVE RESPONDED
With the increased demand for digital services, many burgeoning fintech apps have been challenged to accelerate, innovate, and adapt. Kabbage, an automated lending platform, launched a mobile gift-card service to support small businesses. Digit, a savings app, hosts a complimentary Coronavirus Relief Hub to “help you weather the financial storm.” While Forbes reports “many fintech providers are extending free, discounted, or accelerated deployment offers” as a way to help clients through this unprecedented time.
Fintech apps unable to offer free or discounted services can still rise to the occasion by connecting with new clients and improving customer service. Rob Odell of SALT Lending explained to Finance Magnates, “Businesses with quality customer service and an empathetic support team have likely fared well, as they have been able to help clients manage stress and work through any issues stemming from market volatility, all while protecting their business. When businesses help customers when they need it most, customers remember the experience, and it builds brand loyalty over the long term.”
NO FEAR FINTECH
Though Fintech has entered the mainstream, some customers may still harbor reservations about the security, complexity, and legitimacy of mobile transactions. In reality, fintech has never been safer to use, easier to adopt, or more regulated. Just ask the U.S. government. After the stimulus package passed in March, Treasury Secretary Steven Mnuchin affirmed that “any fintech lender will be authorized to make these loans,” reports Fortune. When the stimulus checks were delivered, the IRS enabled electronic payment options via apps like Venmo and Square’s CashApp.
While social distancing endures, customers will continue to adopt digital alternatives to in-person banking, lending, and money management. But the coronavirus is just a catalyst, and when America reopens, the ease and efficiency fintech won’t be forgotten. This atmospheric rise is just beginning.
Rebecca Castellani is a freelance writer, marketing consultant, and content creator based in Connecticut.