Fintech — Early Warning Symptoms and Prescription

9 min readMay 1, 2020

These days I am interacting with lot of my #fintech friends. As the COVID-19 pandemic continues to create uncertainty, many fintechs are under stress on a number of fronts. A key question is how fintechs may leverage their unique assets and skills to seize new opportunities in the future. It could be an opportune time to think big and act boldly.

Access to funding was already becoming difficult, especially for some early-stage ventures, as many investors focused on established fintechs with clear business models. In addition, recent interest rate cuts and the economic slowdown have radically changed many industry assumptions.

A new era has already begun, with #digitalisation and new #technologies driving the shift. This can be seen by demand soaring for video-calling platforms such as Google Hangouts, Skype, FaceTime and Zoom amongst others, as more people from ever work remotely.

It’s start of new era . The world is now facing a global health emergency which threatens major disruptions to supplychains and global trade, at a time when people are already beginning to question the effectiveness of globalization

The coronavirus is expected to fundamentally change the way customers interact with their banks, retailers and other service providers — and fintech businesses, which were built to operate in a fast-moving, digital-first economy, are particularly well-placed to meet their demands through the crisis and beyond

In my view Governments will be forced to take hard measures, causing disruptions in supply chains, logistics, and customers’ ability to make purchases, as well as a global slowdown in private investments.

Banks are aiming to reduce footfall from customers at the branches to its minimum. Banks want to automate the front-end completely so that people don’t have to really step out of their homes and they can get an experience that’s seamless and superior. All efforts and acts are focused on how to take steps that would simplify things for the end users so that the load on branches is lesser — It’s an opportunity for Fintech

Challenges & Impacts due to the COVID-19 situation?

The most immediate concern, of course, is managing through the current uncertainty. Many fintechs, like the rest of the financial system, have gone into overdrive to respond to the crisis. Many, including insurtech and proptech companies, are shoring up their capital and funding from investors and lenders. Others have implemented cost-saving measures, including workforce reduction. Because revenues for many of them are transaction and volume based, a priority strategy right now is making sure that as many expenses as possible are variable and fixed expenses are minimized.

Majorly their businesses are impacted and need to see how they are going to ensure sustenance; they don’t know how they are going to deliver their products since the timeline has differed because employees and infrastructure are not there fully. So Fintech which will be there will be mature and successful. So, in terms of difficulties, for a FinTech company looking to fundraiser, it is a very difficult time so they can postpone that stuff. Even if funds are available then VCs are not open to clearing those funds. They are saying that we’ll look at this situation once this gets over. Another thing could be the challenges in consumer expectations.

So, if they are working in some banking sector which is not of need for the banks right now then they need to reform their business and see what they can provide to banks.

Fintech startup looking for funding you might want to postpone it ; Fundraising will be tougher
For those challenger banks and fintech apps with customers working from home, a new opportunity arises.
Huge impact on Business Sustainability , Operations Execution , Employee Engagement & Customer Engagement

Most of the Fintech employees feel they are not safe enough, they already know how they have surpassed the last 3–4 years and at least they have a huge pipeline for Fintech , also a lot of firms have been cutting jobs which is another fear for them. Huge impact for Fintech and they will all have to look at cash flow, handling customers, employees, managing funds and everything. So it is a wait and watch game for Fintechs.

Fintech Sustainability (Inprogress)

It’s a very different situation. Imagine if the same had occurred in 2000, at least today we are equipped with technologies like the internet, smartphones & required infrastructure to sustain. We can connect with business partners and do work from home. With the pandemic situation, the impact is everywhere, not only on businesses but on human life. It has impacted all types of industries be it banking, telecom, or MSMEs. For FinTech too, it has been a huge impact and through this, we will know which the stable Fintech are in the next 4–6 months. Fintech which will come out of this situation will actually be the front runners after this situation in the industry ahead. And as per Mckinsey there are 5 stages in any organization and the pandemic tests if they are on the stage of resolve or resilience or do they know how they are going to come out of the situation or can they reimagine their business as normal coming out of the pandemic, how is the impact coming from whatever the Government has done for the industry.

This would also depend upon the type of Fintech , whether it is mature Fintech , whether early stage Fintechs or somebody having to say a lot of projects in the pipeline. So it differs from Fintech to Fintech . They will have to see which stage they are at. At a resolve stage, they want to see their employees, infrastructure and whether they are equipped to handle such a situation. If they surpass this stage, they will come to resilience where they will look onto their business engagements, employee engagements and whether their customers are going to pay for the next 3–4 months, whether they are paying their salaries or not.

Resolve — Leadership skills , Align Workforce , Business Partners , Customers — Communicate , Am I in a good position to continue operating and offering services to my customers ; Communicate clearly, transparently and very, very often
Resilience — Current challenges | Salary , Pipelines , Employee enagegement , Business Engagement , Keep up the team morale and show empathy .Maintaining operational resilience is clearly top of mind as well.
Return — Create plan for return , Analyze the situation in your market and define your crisis management plan , financial vulnerabilities
Re-imagination — Reinvent , Recreate for new Normal . Access readiness for changes in product design , customer requests.
Reform & Regulation — Regulatory Shifts — Keep eye on Regulatory changes and guidelines

So a few Fintechs are very cool and some are not sure what is to be done. So keeping the team’s morale and showing some strategy is very important. The reason is that the FinTechs that already have a crisis management plan will be driven with very good leadership and they know what they are going to offer to the industry. It is actually a big opportunity for Fintechs to reimagine their business models and come up with an innovative solution for this condition.

So, most of the FinTech have surpassed the stage to decide what to do and what not to do but they have to now come up with a good crisis management plan for the next 4–6 months.

Type of Fintech in business in current conditions

Digital On-boarding startups
Cyber Security Firms
Touchless Banking Model
Robo-Advisory fintech
Personal Financial Management fintech
Next-generation payments
Adoption of contactless payments | Move towards cashless societies | Virtual currency
Cloud First Service — Fintech with cloud first services
Remittance- Fintech companies digitizing the international remittance process
Neobanks — API based business models — neobanks

Fintech Sustainability ( Prescription )

It will also depend on which FinTechs are in demand. FinTechs which help in digital on-boarding, which help banks and BFSI sector or telecom entities wherein customers can do the transactions from home, are going to be very successful. Another area that is important is cyber security because everything is work from home, huge data, huge bandwidth is going to be utilized and that’s where hackers are going to look for loopholes. So those kinds of FinTechs will have good opportunities to work for banks security and FinTechs which are working on deliveries with touch-less banking, voice-based banking or personal finance management on their app are all new and were not happening before. A fine balance between upholding the quality, customer service and security standards necessary, and prioritizing the care of banking employees.

Let’s use this opportunity to treat it as Pitch Stop & collaborate more with Ecosystem , Re-evaluate resources , products , Business Models & reboot

Everyone is important — HR , Product , CEO , So take inputs at all levels.
HR must act as a strategic partner. This function should be tasked with forward planning so as to stay ahead of the crisis and adjust to potential changes.
Switch to cash-conservation mode
Revisit product , Architecture , Re-plan, Re-visit customer requirements
Fundraising will be tougher for a while, so focus on surviving
Adjust business models to become more digital
Prepare for Investment presentations
Connect with Industry mentors and take guidance
Try to keep your team, which is your most valuable resource — Reskilling of resources
Keep up the team morale and show empathy
Offer POC | Pilots to financial institutes and learn
Fintech startups are also supporting the community during this though times.
Collaborate with other Fintech , Conduct Webinars among Fintech community come out with ideas , suggestions collectively
Reskill on new domains , #technology

New Normal in the Financial ecosystem & Fintechs

The next generation payment system will set in. Instead of #biometric, I will see how it can be voice-based and seamless. Banks are looking forward to FinTechs that would offer their products directly on the cloud, so it will relieve them of delivering products on-print. Another is remittance FinTechs, earlier people had to travel but now you can send it at home like now Bank serves a lot of customers online. So FinTechs which are ready with the right infrastructure will succeed. So, a FinTech should look at everyone as important, HR, Employee, CEO. So after this pandemic, the leadership will be completely different, working from home I have to be on my toes and be completely agile to see where my team is, what different opinions are there. So focus should be on survival.

Startups which will survive, might become market leaders.

Changes will be at multiple levels.

Building remote Friendly Culture
Building platforms and Application Programming Interfaces ( #API s).
Physical presence/branches rather than offering customers #digital access.
Stick to on-premises hosting over cloud-based hosting
Ease & Automate Complex operational environments
Use of decentralized software teams that are, or are able to, operate remotely.

New Normal for #banks and #fintech will rise around following aspects

More on #Digital — Customer on-boarding , servicing and engagement
Building #API Banking Architecture
Adoption of invisible interfaces e.g. chatbot , conversational Banking , AR VR based Banking
Payment + Customer on-boarding , Servicing + Engagement
Investment on #cloud First Platforms
#blockchain based systems to remove intermediary and operations e.g. reconciliation , user management etc
Automation of Operations at Data Center and Back office
Adoption of #artificialintelligence and #machinelearning at various levels
Adoption of contactless payments, payment hubs , Real-time payments.
Move towards cashless societies model
Explore ethical #virtualcurrency
#Omnichannel offerings.
Robust & secure architecture for Internet of Things and wearable
Rise of marketplace banks.
Fintech companies digitizing the international remittance process.

Way Ahead

As the broader economy shifts from “respond” to “recover”, new opportunities may be created for some fintech. A key question is how fintechs may leverage their unique assets and skills to seize new opportunities in the future. It could be an opportune time to think big and act boldly. Working for a fintech can involve a lot of risk, that’s no secret; according to the Wall Street Journal, three out of every four startups fail.

The global coronavirus pandemic could see banks make profound and permanent changes to their organisational structures, says McKinsey

Whilst there is a lot of personal and economic pain being caused by the current pandemic, with months of quarantine ahead, with both companies and households in survival mode, there will ultimately be an end to the crisis. History has shown us this with previous such crises over more than a century.

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