The COVID-19 pandemic was a critical hit to the world economy, impairing businesses to an unprecedented extent. The pandemic led to a 3.4% plunge in the world’s GDP, resulting in more than 2 trillion USD lost.
FinTech showcased its potential by playing a disruptive role in conventional financial systems during the COVID-19 hardship. Traditional banking institutions could not promptly and accurately address users’ needs, and their outdated approaches were restricted to people’s finances when lockdowns became the new norm. Companies like Swissmoney, which incorporate the best of FinTech, came out the strongest, as their revolutionary swift transfers and all-in-one platforms democratized financial services.
The current economic resilience may be close to its end, as FinTech innovations propose measures to build bridges towards a better financial future. This article presents the benefits of FinTech that aid economic recovery in an era of post-pandemic crisis and uncertainties.
FinTech Fueling Recovery In a Period Of Economic Uncertainties
The COVID-19 pandemic created global economic resilience unseen for the past 40 years. Inflation surged close to 8% in 2022, compared to 2% in pre-covid times. Numerous retailers and businesses were forced to shut their doors, which has caused many to file for bankruptcy. Moreover, international trade took a hit as governments imposed harsh restrictions and regulations. Governments and central banks had to develop tighter monetary and fiscal policies, raising interest rates to fight rising inflation.
The desperate measures resulted in many industries losing significant revenue, as the stock market experienced one of its weakest years since 2008. The FinTech industry was not left behind either; investments drastically decreased due to the post-pandemic crisis. This was extra lousy news for fintechs, as companies reliant on private funding and investor finances struggled to keep their business alive.
However, the FinTech industry’s adaptability has kept service providers from diminishing during the harsh economic outlook of post-COVID times. Technology continues to progress to new heights as the opportunities for technological inclusion and digitalization in the financial sector continue to expand its capabilities, services, and tools.
What is more, research conducted by the Centre for Sustainable Finance Innovation of the Nanyang Technological University, Singapore, found a correlation between an economy’s GDP growth and unemployment rate and FinTech adoption. The scope of the study covered 86 countries, analyzed economic, social, and healthcare factors, and evaluated how financial technologies affect these sectors. The results of the studies showed that governments that took a digitalized financial approach and incorporated technologies in their systems showed better economic growth than those that lacked FinTech.
FinTech’s Benefits in the Post-pandemic Financial System
FinTech is playing a pivotal role in dealing with the current economic resilience, offering the needed innovations to revolutionize finances and disrupt traditional banking. Below are some of the benefits FinTech has introduced to improve financial systems in a post-pandemic economic crisis:
Even in today’s interconnected world, more than 1.7 billion people worldwide don’t have access to financial services. One of FinTech’s key contributions towards economic recovery is its globalized approach, focused on bridging the gap between unbanked individuals and the financial world. Digitalization offers mobile banking solutions to unbanked populations, reducing expenses that traditional banking cannot bypass.
Cost-effective Products and Services
Besides bridging the gap towards financial solutions, FinTech removes barriers to entry for those unable to afford traditional banking services. Banks usually charge high fees and taxes and require extensive documentation like proof of income; therefore, many individuals need help to afford and enter the financial world. To address the matter, FinTech companies develop cost-effective products and services, including fee-free checking and savings accounts, low-cost international transfers, and competitive interest rates on savings.
Remote Banking Capabilities
FinTech flourished in times of economic crisis. When banks were closing doors, FinTech service providers proved that there was no more need for physical buildings in the digital world of the 21st century. Moreover, with e-wallets, mobile apps, and online lending, physical cash lost favor as people chose the safer approach of online payments.
Enhanced Digital-first Financial Solutions
Banknotes and coins fell out of fashion as FinTech introduced swift online money transfers took over. With cryptocurrencies, transactions happen in just a couple of seconds. People no longer need to wait 3-5 business days for a payment to be processed. FinTech gave digital flexibility to customers, and companies like Swissmoney show a true representation of how 21st-century financial platforms should look. Round-the-clock transactions, instant internal transfers, and multi-currency payments that serve all fiat and crypto needs of a user are part of the revolutionary initiatives of FinTech.
Fintech promotes environmentally friendly solutions through means like digital payments, paperless transactions, sustainable investments, and carbon tracking and reporting. It also facilitates crowdfunding for green projects, offers energy efficiency loans, and supports financial inclusion for sustainable initiatives. Fintech’s ability to innovate and provide digital solutions for sustainable finance, carbon reduction, and environmentally responsible investing plays a vital role in addressing environmental challenges and fostering sustainable economic growth.
New Career Opportunities and Workforce Improvement
With the development of financial technology, companies seek developers and industry experts to join their workforce. The fusion of technology and the financial sector creates new career opportunities as the labor market expands and unemployment declines. Machine learning and AI also create a streamlined working environment and enhance productivity, as the automation of software, cloud computing, and the introduction of language models have assisted in improving work processes in the financial industry.
The role of FinTech in the post-pandemic economic landscape is undeniable. As the world faced unprecedented challenges and economic uncertainties, FinTech demonstrated its resilience and adaptability. Its innovative solutions, from remote banking capabilities to financial inclusion and eco-friendly initiatives, have helped bridge gaps and contributed significantly to economic recovery and growth.
FinTech’s ability to evolve and integrate technology into financial systems has proven essential in building a more resilient and promising financial future. Struggles and risks in the industry remain, but with proper governance and regulation, FinTech has the potential to assemble the new benchmarks for the financial system.