The business landscape is changing drastically as a result of the coronavirus pandemic and this has created new opportunities for certain sectors. One sector that has been thrust into the mainstream over the last year is fintech, which was previously on the rise even before COVID-19 but is now firmly in the spotlight and will be key in the recovery process.
Fintech Entering the Mainstream
Fintech is now being globally adopted and at scale as a result of the pandemic whereas previously it was mainly startups as opposed to established companies scaling up. It was always said that Fintech was the future and was waiting in the wings, but now the time has come and many traditional institutions are collaborating and partnering with Fintech firms to deliver solutions to the many key issues that are currently being faced.
Merging Fintech & Traditional Institutions
In addition to enabling fintech to enter the mainstream so that the public are used to these solutions and willing to embrace them, businesses in this industry have also benefited by learning processes from traditional institutions such as making senior hires and applying for full banking licenses. This means that fintech and traditional institutions are merging together and benefit from one another.
One key area that fintech has helped with over the last year and will continue to do so in the economic recovery is lending, particularly for SMEs. British Business Bank (BBB) recently published a report that discovered that a record 45% of SMEs sought financial support in 2020 (compared to 19% in 2019) and fintech lenders were able to provide businesses with much faster access to funds due to the use of AI and machine learning to speed up the decision making.
Looking ahead, it is clear that fintech has a huge role to play in the economic recovery and helping SMEs to get access to funds. While it is hoped that the pandemic will end, the fallout and repercussions of this will be felt for some time and you then have Brexit on top of this. This means that 2021 and the next few years are going to be extremely challenging for businesses in the UK so innovative and flexible solutions will be needed to support UK companies, particularly SMEs that may struggle once government support ends. With further investment, fintech will continue to develop and it is thought that ‘one-click lending’ could arrive soon which would allow businesses to get sizable loans almost instantly.
Fintech has been on the rise for several years, but it has now been thrust into the spotlight during the pandemic and will play a huge role in the economic recovery and helping businesses to weather the storm. Innovative, flexible and rapid solutions can be utilized with fintech and the technology will only improve in the coming months and years to ensure that fintech remains in the mainstream.