FinTech: COVID or Not, Fintechs are Flourishing
Amidst the doom and gloom from the virus, fintechs are hiring, raising funds, and making billion-dollar acquisitions.
Interviews at financial services firms are up 39% since January 1, according to data from HackerRank quoted by Crunchbase. Even in the depths of the coronavirus crisis, fintech Stripe managed to raise an additional $600 million, garnering a better valuation to boot. SoFi went shopping to bag Galileo for $1.2 billion earlier this month. The SBA allowed fintechs to make loans under its Paycheck Protection Program. What’s working for fintechs? (CrunchBase)
They are in a sweet spot
The lockdowns and social distancing norms have driven consumers to fintech apps to manage their finances. On the other hand, traditional financial institutions are being forced to adopt technology, practically overnight, in a bid to sustain operations. In both use cases, fintechs come up trumps.
Working from home has become the new normal. Financial services companies are discovering the joys of remote hiring because they can now pick from a vastly expanded pool of talent.
“Where every sector is contracting, there is a credit crunch, people are losing jobs and companies are not actively hiring, we are uniquely growing and hiring,” said Domm Holland, co-founder, and CEO of Fast. “We are very hungry for talent.” The company is creating a one-click login and checkout platform to speed up and simplify online shopping. It raised $20 million in a Series A round in late March.
Fintech’s disruptive power amidst the virus turmoil
The virus has completely changed how people shop, learn, feed, or entertain themselves. Fintechs are best positioned to pivot to meet these new challenges.
Businesses revamping their physical businesses to online models are turning to payment processors such as Stripe or PayPal (NASDAQ: PYPL).
FinTech lending has suddenly come of age. Quick-on-the-draw loans for struggling businesses and individuals have placed lenders such as LendingClub (NYSE: LC) in a unique position during the crisis. In fact, in February, LendingClub even managed to become the first fintech to acquire a bank.
But fintechs have been building up their game over the last decade – improving technology, listening to consumers, and placing a premium on speed, convenience, and costs with their products or services.
Perhaps, COVID has turned out to be their debutante ball, and rightly so.
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