Covid-specific FinTech products will drive growth, GPS says

By Sunniva Kolostyak

Launching financial products which address concerns around Covid-19 could help drive FinTech growth while also supporting vulnerable groups of people, according to the Chief Operating Officer at Global Processing Services (GPS).

“I think it’s a fantastic time to be in payments,” Matt Clare, COO at GPS, told IBS Intelligence. The issuer processor works with over 40 issuing banks and operates programmes for more than 100+ clients, including Starling Bank, Revolut and Curve, in 60 countries, using over 150 currencies.

He stated that cash, which was already on its way out already, has been made further redundant during the pandemic as even small businesses implement portable terminals. Moreover, payments has jumped to protect vulnerable groups of people, with different functionalities and flexibility making life easier for those unable to go to a bank branch.

The differentiator has been the simple solutions – virtual and plastic cards, the ability to freeze cards, as well as unfreeze them if found, and spending insights.

“All of those functionalities might seem quite small and insignificant, but to the millions of people out there using these products, that has helped them avoid challenging situations. I think functionality is key, alongside exemplary real-time service,” Clare said.

Helping at-risk groups

Moreover, firms that have launched Covid-specific financial products, serving those most impacted by the pandemic, could be the ones to drive future FinTech growth.

The GPS COO said: “In the UK there were up to 3 million people who were on the shielding list, and regrettably, they were not able to leave their homes for three months, which meant that they couldn’t go to Tesco, Sainsbury’s, or get prescriptions. In many cases, those people had friends or family, but in some cases, they did not.”

“In some cases, they’re tech-savvy so they can have a companion card, something Starling Bank launched where the main cardholder can limit the amount that a person [with the companion card] getting the shopping or prescription has access to. In other cases, there were people who were not tech-savvy. So, our clients would launch products which allowed telephone banking, but with the same amount of control, so you could give a card to a carer, a grandson or granddaughter, or volunteer from the council, and that person could then get your shopping.”

Clare agreed that companies implementing Covid-specific solutions are looking at either increased profits or better client relationships as it addresses the heightened anxiety among people. For example, Soldo has been working with the municipality of Milan to hand out prepaid aid cards, Starling Bank launched its aforementioned companion card in the UK, and B4B Payments issued specially designed prepaid cards for charity Migrant Help.

The solutions also drive client relationships by addressing the anxiety which comes from experiences of fraudulent transactions, purchases not showing up, and things going wrong.

“And as we know, unfortunately, when there are friction bumps in the road in a relationship with a product, that can sometimes damage the relationship to the point where people will leave and change provider. It’s a more and more competitive market, particularly in the UK and some parts of Europe, so that level of functionality and simplicity is absolutely critical.”

The demise of cash

Going forward, Clare expects much more of a move to electronic payments from cash. “I think we’re going to see the FinTechs seek out those parts of the economy where cash remains prevalent – benefits, charities – they are going to have to find a way of getting more payments electronically.”

He added that it is positive for the economy too, as electronic payments will cut tax evasion, exploitation, and opaque areas of the economy.

Moreover, Clare and GPS expect exponential growth of FinTechs in embryonic markets like Australia and Hong Kong, as well as in the UK, where over 85 per cent of end customers still have accounts with one of the Big Five.

“I think in some of those less mature markets, hopefully through some of the COVID-specific products, we’ll see businesses grow, and more of a growth in FinTech.”