When the outburst of COVID-19 first hit the world, all the major businesses were shut down leading to an economical crash. Name one sector that wasn’t affected. Transportation was at a halt because people didn’t step out of home because of several lockdowns. Hospitality and tourism sectors were affected too because of the same and so were aviation along with Real Estate.
There wasn’t any sector that hadn’t faced the severe impacts of the pandemic. Though, there was one sector that was thriving and succeeding even in the pandemic. When every other sector was struggling and the economy was derailed, FinTech saw an over 60% surge in its growth during the pandemic.
So, what happened? How did COVID-19 trigger its growth and what made FinTech thrive in the era of the COVID-19 pandemic? Let’s begin our assessment in detail.
According to a survey, Online payment saw an 80% growth within the first 250 days of the lockdown being imposed in India. A 23% growth was also recorded in the first 101 days. As we all know, not everyone in India uses Digital payments as a mode of regular payments in their day-to-day lives. A lot of them preferred cash to make payments before COVID-19.
There may have been several reasons for that:
- Non-tech-savvy: People not being familiar with technology meant they didn’t see online payments as a convenient method. They preferred traditional payment methods over it.
- Lack of trust: With all your funds being available online for transactions, people feared an increased chance of hacking. The fear of digital theft was the reason why digital payment platforms were not trusted widely
- Lack of acceptance: Not everyone was well-versed with getting money online as cash was the usual, traditional mode of payment. Therefore, not everyone accepted digital payments.
WHAT CHANGED DURING COVID-19?
While the COVID-19 pandemic was a bane for everyone, the FinTech sector took it as a boon. Things started to change during COVID-19.
Related Article: Has COVID made the E-commerce sector boom?
HEALTHCARE AND DIGITAL PAYMENTS
Touching an infected surface or a person was one of the ways of getting COVID along with many others. To make sure people don’t touch anything and stay safe while paying money, digital payment methods gained the upper hand. The businesses and e-commerce platforms already had cashless payment options. Though, the usage of the same increased only during the Pandemic. The sellers & service providers encouraged people to go cashless for safety purposes.
Earlier, the products used to get delivered and money was paid in cash. This change worked like evolution and people started adapting to it as it kept everyone safe from coming in contact with COVID-19. The payments saw a shift over to Cards, UPIs or digital platforms even ‘cash on delivery‘ mode was still available.
Similarly, other retail businesses started adopting the same methods. The scan codes of different digital payment apps could be spotted at any place no matter how big or small they were. This change was only possible because FinTech was designed this way.
WORK FROM HOME/FREELANCING AND DIGITAL PAYMENTS
Offices all over the world were shut due to multiple lockdowns leading to a work from home culture. Work from home culture later gave birth to freelancing. In both these fields, you could simply stay at home, work, and earn money.
As the number of freelancers increased during the pandemic, digital payment apps were the only way out when it came to paying them for their work. Why? Because
- They were neither regular employees with a salaried account. An employer couldn’t just transfer funds into their account
- Nor could they come to the office to collect their money in the form of hard cash.
This is where digital payment apps came to the rescue. It made sure no company had any problem paying any number of freelancers any amount of money.
It also helped passionate freelancers convert their dreams into reality. With the regular and hassle-free payment from their clients through a digital method, nothing seemed tough.
BUY NOW PAY LATER BUSINESS MODEL
This payment method gained popularity during the pandemic as the need for credit (loan) rose. COVID made businesses along with individuals face a financial crisis. With this feature, they were able to fulfil their basic needs without having to worry about generating funds in a time of crisis.
With most of the banks and financial institutions being closed due to pandemics, FinTech served as a tonic to the people in desperate need. One study even showed that the demand for credit in the USA at the time of the COVID-19 outburst became 50 times higher than normal.
This trend turned out to be most beneficial for SMEs (Small to Medium-sized Enterprises). The SMEs were struggling to generate funds and cover their basic needs the most when FinTech came in as a boon for them.
FinTech also boosted its revenue by earning from the interests of the credit it provided to its customers.
Related Article: Benefits of Digital Payments for Small Businesses
FinTech was always designed to achieve major success but it took a pandemic for people to realise its importance. However, with people becoming digitally aware and realising the value of FinTech, there is no going back from here. Especially with the uncertainties of the pandemic glooming over our heads.
Even when the pandemic comes to an end, and we certainly hope so, people are going to pay digitally. Even if they order a fruit juice at a juice stall or a Caramel Frappuccino at Starbucks, digital payments are in now. Not only does it give people a sense of security of not touching any COVID-19 infected surface, but it also gives them freedom from carrying cash in their pockets which might get stolen or lost at any point.
The freelancers love FinTech since getting paid for their work has gotten easier now. People who can’t afford to buy something they desire at one point can now avail of Buy Pay later instead of letting the item go with a heavy heart. Both these things have contributed heavily to the success of FinTech during the pandemic. But, pandemic or no pandemic, things are going to stay like this. As a customer’s requirements for credits or someone’s payments aren’t dependent on the destiny and future of the pandemic.
Working from home is the new normal now and so is using credit facilities. This is where FinTech is going to have an advantage and will thrive even when the pandemic comes to an end. The post-COVID world, for sure, will be more advanced than the pre-COVID world and we’re all in for it.