Beyond Covid-19: the future of financial and payments technology


Fintech has changed the face of banking, insurance and finance in recent years. How will the sector adapt in the post-Covid-19 landscape?

Fintech is expected to play a crucial role in the post-Covid-19 financial world. That said, some fintech companies will need to adapt to the "new normal" to remain relevant. Starting with banking, fintech has significantly shaped many areas of finance, be it investments, insurance or financial planning. The question is: which fintech companies are best positioned for the future after Covid-19?

In the case of e-commerce, social media and alternative technologies, some companies are thriving and some players are consolidating their position. This can also be seen in the banking sector, where government programmes are mainly distributed through established institutions. For example, while PayPal and Square received permission from the Internal Revenue Service to distribute funds, neobanks did not. This fosters the perception and likely reality that powerful companies will not only remain powerful but are also growing. In the US alone, billionaires have added $380 billion to their personal wealth, while unemployment claims soar.

Bad news for small players
However, the effect of Covid-19 on smaller fintech companies has been devastating. Some companies are unable to continue due to lack of funds, while others are cancelled because investors are demanding unreasonable terms for investment. Of the latter, if companies accept these terms, they could lose the real potential to scale funding further down the line, and if they don't they risk becoming obsolete. The financial technology companies that will be most affected by Covid-19 will be those in the sectors most affected, such as budget travel, in-person engagements, restaurants/bars/clubs and marketing and advertising. This is pervasive across all fintech approaches, whether solutions, apps or services, and is specific to pre-Series A firms.

In the banking sector, there are two main pain points: customer engagement and business performance management. Banks have been forced to engage with consumers to drive better customer experiences and have been looking to leverage fintech partnerships or acquisitions to do just that. As the Covid-19 crisis continues, many of these projects have been put on hold in favour of other important issues for banks, such as enabling staff to work from home (which is very difficult operationally), securing access to core systems (i.e. money and credit), as well as managing business costs and operational pressures. We now see a massive shift in focus in banks from fintech for customers to fintech for the business and its systems.

Covid-19 has completely dried up any funding for pre-Series B startups in terms of new investors, and has caused delays and drops in funding from existing investors for pre-Series A startups in the areas of the market most affected. For existing companies in the market, the funding is only there to extend the runway by around 18 months, along with massive cost reductions with the priority of company survival. For startups outside these critical verticals, valuations have declined significantly in anticipation of the economic slowdown in the coming months and startups looking to raise Series A or later have to meet higher annual and monthly recurring revenues to secure funding on good terms. Overall, the terms for funding have also deteriorated, with older clauses seen again in the market.


pinjaman uang Kredit Pintar