Published on June 23rd, 2020
Although, the ongoing Covid-19 pandemic is not receding yet, things are brightening up in the world of fintech.
In the US market, some of the fintech companies are now trading at or their pre-Covid-19 stock prices.
Some of these companies have even outperformed listed SaaS and Consumer equities. There are many signs which suggest that things are looking up in the fintech sector, yet venture capital is no mood to take risks.
There are circumspect and far more selective. In the post Covid-19 period, recession is going to be reality. Central banks are also risk averse.
Hence, venture capital is also selective about funding. Nobody is quite sure which fintech will get funding.
Different segment of fintech have been affected differently. It has accelerated change and adoption in certain segments of fintech, while slowing change in others.
Here we’ll take a look at some of the fintech verticals which are thriving, and others which are just surviving.
Payments And Remittance
Covid-19 pandemic has led to online shopping boom. People are not just working from home, they are also buying everything including f=groceries, clothes to non-essential items online. And tis online shopping boom is expected to stay here even after the pandemic.
Startups like Klarna, Adyen, PayPal will be the biggest long-term beneficiaries of Covid-19.
On the other hand, remittances won’t see the same kind of uplift in the short-term. US investment bank Qatalyst Partners has predicted that higher unemployment and loss of jobs for migrant workers will adversely affect companies like TransferWise, WorldRemit and Azimo.
Trading apps, with Revolut, Stake and Freetrade all are performing well. Even new trading services have been launched in UK, Germany and Austria.
Dutch fintech Bux has launched its Zero commission-free trading in Germany and Austria.
Since, ore jobs are on the line, taking care of finances has become important. Covid 19 is expected to bring both short term and long term benefits for trading apps, Qatalyst Partners had predicted in its May update.
People tend to buy more insurance policies during recession. Thy also become more risk-averse. This is not bad news for insuretech providers.
It is one of the few sectors that is expected to withstand Covid and also get funding from venture capitals.
Prospect for digital banks is not very bright. Low consumer spending i bound to adversely affect this segment.
It has been reported that employees have been laid off by Monzo and Monese. Despite the current situation, long term prospect is not that bad for this segment.