FinTech: Post-COVID-19, Fintech To Emerge Stronger, Says Dubai Future Foundation
A special report from the Dubai Future Foundation (DFF) examines the post-COVID scenario for Fintechs.
“Life after Covid-19: Financial Technologies,” a report issued by the Dubai Future Foundation, examines the impact of the pandemic on the UAE and the Arab world, and in particular, the fintech sector. The report reassuringly concludes that the sector would emerge stronger from the crisis as people take to digital services to run their lives. (Dubai Future Foundation)
“Global expectations indicate that the financial technologies industry is widely expected to emerge stronger from the challenging risks of the pandemic as people turn to digital services,” said DFF. “This sector will successfully overcome the crisis thanks to its efficiency, reliability, and clear ability to influence the global economic system.”
Fintechs outperform during the COVID-19 crisis
The report observed that compared to stricken sectors such as tourism, aviation, and retail, Fintech has instead benefited from lockdowns, social distancing, and shelter in place rules. Whereas the airline and US retail industries could lose $250 billion and $430 billion as a result of the outbreak, the story is quite the reverse for fintechs. Financial apps are breaking download records, while payment processors and stock brokerages are enjoying record signups.
Digital currencies and fintechs
The shortcomings of the current physical currency system as well as the banking industry for the rapid distribution of fiscal stimulus have come to the forefront. On the other hand, digital currencies can be rapidly sent to vulnerable groups during a crisis such as COVID-19. These include people without bank accounts. Fintechs offer an alternative that is quick, inexpensive, and easier to transact. Again, fintechs achieve financial inclusion very efficiently. Already, central banks are experimenting with digital currencies. For example, the UAE and Saudi Arabia are running a pilot program for a shared digital currency.
Banks and other financial intermediaries
The report observes that COVID-19 measures make it difficult for customers to undertake physical branch banking. As such, banks and other financial intermediaries should take steps to augment their digital platforms and services and make them available at lower costs.
This will “allow the advantages of financial technology – increased speed, reduced cost – to start to translate into market-wide inefficiencies and ease financial stress.”
Related Story: FinTech: Crystal Ball for 2020 (KPMG’s Report)
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