Coronavirus is here, and it’s making a big impact on every aspect of business. From trade market swings to airline collapses, the economy of many industries is taking its toll and having major constraints.
What about the sector of fintech? Like everything else, it’s also likely to be under threat. There’s more to come from COVID-19 in the coming weeks where large and small fintech companies take a hit. Some could even benefit.
Let’s see what impact coronavirus will have.
It’s evident that large businesses are already feeling the heat with the coronavirus outbreak. Companies such as Mastercard and Visa have cut their predictions for revenue due to the scare. This is because many users of credit cards are unlikely to use it to purchase flights, which is one of the more common transactions for credit card use.
Due to restricted travel guidelines, many airlines are being forced to cancel or reimburse flights which are causing many members of the public to stay isolated in their home country. With it all building, there are plenty of losses being made with many companies.
Other companies are reporting massive losses. Paypal confirmed that due to the coronavirus outbreak there has been drops in ecommerce activity. There have been drops in all items ranging from the purchase of clothes to designer sofas. PayPal expects this will have at least a 1% drop on a foreign currency neutral-basis.
People are also expected to dine out less as they’re encouraged by governments to social distance in public spaces.This means companies like Square or Stripe who provide payment terminals will record losses as less payments are being received by local businesses.
And it’s not only external affairs that are likely to be damaged by the outbreak. They’ve also confirmed that they’ve had to stop the organisation of in-person interviews. This means having to adapt their methods to other forms of communication as they look to hire staff.
Stock market impact
Robo-advisor fintech startups are also likely to take a hit in this time of worry. This is because companies in this sector relies on customers having active activity on the stock market. Therefore, companies such as Wealthfront and Betterment are likely to record hits.
With the stock market being so uncertain, there has been a vast rise in account sign-ups and high volumes of activity in the apps. This meant long hour outages and knock on effects for the infrastructure that support this kind of activity.
How about positive impacts?
Whilst we’ve seen many negative impacts recorded in the fintech sector, at the same time we have also seen some companies benefiting from. It’s encouraged many companies to adopt fintech for the purpose of their business. For example, the Banking and Insurance Regulatory Commissions company Ye Yanfei, explained that blockchain is being utilised for medical data verification.
Many countries are also encouraging the use of contactless payment to prevent the spreading of the virus any further from the exchanging of money. In South Korea, where regulations were once considered rather strict in the fintech domain, they’re now willing to ease the regulations that they have. This is to mitigate the impact of the virus spreading and having a larger impact on the economy.
It’s clear that the outbreak is having major impacts on several aspects of business. What was seen as a revelation when fintech was introduced as a technology, we’re now seeing the possibility of having no use in this difficult period. However, we have seen that with the right application and making the most of opportunities, there is a possibility to adapt methods to keep afloat and tackle coronavirus.