Fintech firms expect it will take over a year for their sectors to bounce back from the impacts of the coronavirus, according to a bobsguide survey conducted in April and early May.
But while most respondents reported a negative impact from the pandemic – with a sudden drop in sales and quick re-structuring of their business models – the survey revealed significant outliers. Paytech firms, for example, reported more positive outcomes than any other fintech sector.
Shrinking bottom lines were businesses’ main concern regarding the pandemic, with nearly half of all respondents listing it as a primary worry. 32 percent reported concerns over remote working and technological issues and 22 percent listed cybersecurity as a key concern.
Nearly 50 percent of business reported a somewhat negative impact on their sector, while 20 percent reported a great negative impact. But despite most fintechs struggling, the majority claim to be prepared to adapt to difficult times. 45 percent reported having a solid business continuity plan (BCP) in place while another 45 percent reported having some plans in place.
64 percent of respondents identified as a paytech, banktech or asset management tech company.
60 percent of paytech firms surveyed reported the pandemic as having a positive impact on their industry. They all reported work being busier and of those reporting a positive impact, 83 percent believe they will have bounced back within one to three months of the start of lockdown. A small percentage of firms reported that sales and profits have gone up and that they had expanded their staff. The majority of paytech firms reported being well-prepared to deal with the challenges of coronavirus such as remote working and accelerated digitisation.
The payments sector was already undergoing industry-wide changes prior to the pandemic. In 2019, UK Finance estimated that cash would account for just nine percent of all UK payments by 2028, a trend which as hastened in recent months. Link, the UK’s largest cash machine network, reported that cash withdrawals were down 60 percent during lockdown, while the contactless limit rose from £30 to £45 in April. E-commerce has also grown quickly, with UK online retail sales rising by 24 percent in the April compared to the previous year, according to IMRG, a UK online retail association. As a result, paytech firms have been needed more than ever, which may have led to increased workload and revenue during coronavirus.
The majority of banktech providers reported a negative impact to their business, with 75 percent reporting either a partial or great negative impact on their industry. 58 percent of firms believed it would take them over eight months to recover from challenges brought on by the pandemic. Of all effects including workload and restructuring of business models, the greatest impact on banktechs has been a drop in sales and profits. 71 percent of firms reported a drop in profit, contrasting from paytech firms where most firms did not see sales affected, apart from a few who reported an increase.
While banktechs assisting institutions with business continuity may have seen an uptick in services over the past two months, the majority have suffered as financial institutions pull back investment on anything that isn’t deemed essential.
Asset management tech
Vendors of asset management technology experienced similar outcomes to banktechs, with 81 percent reporting a negative impact on the sector. Of the firms reporting a negative impact, 77 percent reported a drop in sales – however one respondent commented that they anticipate the drop to be temporary before a speedy recovery. This sentiment was expressed by most firms; 62.5 percent believe their business will have bounced back fully within seven months, a contrast to banktechs who typically expected a longer recovery period.