Over the last five years, the world has seen tremendous growth for startups in the fintech industry. The past few years have been the defining moment in this space with thousands of companies being started and funded all over the globe.
In 2019 alone, fintech reached an inflection point on a global scale, pulling in $34.5 billion across 1,913 deals.
This is partly due to the democratization of the tech stack required to launch a new financial services business and partly due to changing customer needs.
Consumers have been demanding superior user experiences with instinctive use and transparency which the incumbents have been slow to respond to, giving rise to new, more agile fintechs.
As we are observing the impact COVID-19 pandemic is having on businesses across the world, all kinds of companies have stepped up to help their customers, employees, communities, and partners in diverse ways; and the fintech industry is no exception.
How Fintech Companies Are Helping With the COVID-19 Situation
- Accepting loan applications for the Paycheck protection program: Kabbage, Veem, Biz2credit, Lendio, Fundera, Paypal. Divvy BlueVine, OnDeck, Funding Circle, Cross River Bank, Mercury bank
- Helping banks and lenders with tools: Plaid, Stripe
- Organizing information to access the Paycheck protection program: Gusto, Zenefits, Rippling
- Square as a company has stepped up in a big way: It has waived the SaaS fees for all its products to its entire customer base for the months of March and April. It launched new features to enable restaurants to get set up easily for in-person pickup & local delivery. Also, with its cash app, Square enables its customers to receive the $1200 check as a part of the CARES Act.
The speed with which these companies have acted is impressive and extremely important considering what is at stake here.
It required them to adjust rapidly to new working styles and change their product, engineering plans, and hiring plans while continuing to ship products for their customers, especially when the lockdown continues with no end in sight yet.
Fintech Companies Are Making Social Distancing Easier
Fintech services have made it easier to observe social distancing which has been reported as one of the key drivers to flatten the curve and reduce the spread of the virus.
POS providers have increased the limit up to which the customer can authorize a payment without having to enter their pin code to enable more contactless payments. Some payment facilitators are allowing for customers and developers to quickly and easily spin up products to accept donations.
Newer, challenger banks that have allowed customers to open and verify new bank accounts online without having to visit any local branch are coming in handy to make cashless transactions seamless without having to worry about going to an ATM.
Some of these products are also making corporate online operations much smoother, which in turn makes them more immune to an outbreak and more reliable in the future.
These products are becoming a crucial part of our lives and will continue to do so even after the crisis ends.
Fintechs Supporting the Community
A lot of the fintech companies have also stepped up within their respective communities during these difficult times. Some of the efforts have been towards providing tools and resources on managing the business, especially for local retailers and merchants.
While other efforts have been focused on making it easier to process cancellations by providing an option to purchase gift cards for restaurants, waiving of transaction fees, or allowing donations to local restaurants, non-profit organizations, and medical centers.
This behavior might lead to a fundamental shift in how products are designed and built in the future with some of these features established as the new normal.
The last decade has been a tremendous ride in globalization, with companies being able to serve more and more customers globally in a shorter amount of time.
But this pandemic might be the initiation of a new industry behavior where serving the needs of the community, rather than unhindered growth, becomes one of the top priorities.
As we see fintech companies already taking initiative, this industry is likely to be leading the charge.
Disclosure: This story is brought to you through an ESPACIO portfolio company