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Pandemic makes FinTechs more agile and adaptive

The FinTech sector has risen to the challenge of the Covid-19 pandemic, responding to customer needs and filling gaps in services that may not otherwise have been addressed in the short and medium term.

The impact of Covid-19 and of lockdowns around the world has forced many businesses to rethink their strategies and the FinTech sector, in particular, has received a lot of attention in recent weeks, with some actors seeing a significant rise in business activity even though whole economies have been shut down. Sub-segments such as lending, digital banks, wealth management and digital payments have witnessed massive traction globally. In reaction to this leap in activity, several players have been either pivoting their models or adding more services onto existing platforms.

In India, for example, digital banking platform Niyo Bharat has launched Niyo Pathshala, an online educational initiative aiming to educate customers about the benefits and features of branchless banking. The Bengaluru-based company caters to blue-collar workers. Niyo Bharat is a digital banking platform and its primary objective has been to reduce visits to ATMs, ensure the volume of cash-led transactions is minimised and bank transfers are taken care of through the app ecosystem.  The session is conducted on Facebook Live. The education series covered the following aspects:

  • Usage of app for branchless banking during lockdown
  • Features like balance checks, passbook updates, fund transfers and online shopping
  • Security measures like pin change and lock/unlock card through the app to avoid ATM fraud
  • Blocking of the ATM card in case of a theft or loss of card
  • Reaching out to customer care through app, ticket-based requests to resolve frequent queries

Niyo Pathshala has seen more than 10,000 customers joining the online educational programme every evening. The neo-bank also plans to provide education on fraudulent activities and continue driving efforts towards financial inclusion for blue-collar workers.

Mswipe, a point-of-sale device and solution provider, has launched a similar programme as well as pivoting into e-POS. Pine Labs is another POS player that has changed its focus from offline POS to electronic POS as physical stores remain shut during lockdown.

Several sub-categories of FinTechs such as digital NBFCs, lending platforms and digital banking platforms for unorganised/semiorganised sectors such as gig economy workers, are expected to be adversely affected during lockdown and are looking at pivoting to alternative business models or newer use cases in the short term.

Sarvatra Technologies has launched door-step cash delivery in the rural India while CRED, a credit card payments app, entered the lending segment recently with products such as CRED RentPay and CRED Stash to boost usage of its app. Covid-19 has changed the way businesses and consumers think about payments and several FinTechs are now focusing on providing contactless payments for other sectors.

In the US, Plastiq has pivoted its bill-payment services to target cashstrapped SMEs instead of consumers. The company is now focused on enabling businesses to make or accept payments via a credit card for virtually any expense by leveraging SMEs’ own credit lines.

Another US-based FinTech, challenger bank Moven, has shut down its direct-to-consumer offering after being hit by the pandemic, to focus on selling its technology to banks. Customer accounts closed with effect from 30 April 2020 but the challenger bank’s Moven Enterprise is to offer its mobile banking, budgeting and wealth management software to US banks.

While forecasting exactly what trends will prevail post-Covid-19 may be problematic, FinTechs are working on strategies to become more agile and adaptive in nature. The ecosystem could continue to witness many more pivots throughout 2020.

Article by:-

Priyanka Pani
Senior Regional Correspondent –
Middle East and Asia, IBS Intelligence

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