Financial Inclusion & FinTech during the COVID-19 Crisis

Financial inclusion remains a powerful development tool to improve access to finance and to support vulnerable individuals and households during the coronavirus or COVID-19 crisis. Solutions for financial inclusion can help mitigate the effects of the crisis through the combined use of Fintech and short-term policies.

Following are some answers to some pointed questions from our last webinar last week on this subject.

What is the FinTech industry looking like in Pakistan?

Building a cashless society, only 20% of the population is financially capable and banked in Pakistan.

In Pakistan and South Asia, what we see is that for the last few years, banks were approached by Fintech companies. The problem is they only view digital as a hobby. Banks who don’t are ahead of the pack. Fintech that is focused on digital payments and contactless payments will continue to do well.

Fintech companies in Pakistan are differentiating themselves in consumer payment and easing merchant and business payment, and the regulator has been supportive of financial inclusion and digital transactions.

Has COVID-19 affected FinTech in Pakistan?

In COVID times, there was a fee that charged customers for inter-bank money transfers. The state has recently mandated that it should be free of charge. It pushed bank transfers through the roof.

What is the main roadblock in enabling cashless society/ users to use digital payment? Is it inclusive partnerships?

The biggest roadblock is the mindset. When the government embodies the spirit of cashless, you will see it permeate society as well.

SMEs have a $200b opportunity and they mostly operate using cash in Pakistan. Their challenge is that most of them can’t do cashless. We need to convince them to get on cashless payments.

What is your strategy in crypto blockchains?

Crypto is not legal in Pakistan, while blockchains are. I expect that in the next couple of years, Fintech companies will be in that space to connect business with blockchains. I also expect a lot of process digitalization via blockchains.

What’s the role of FinTech in times of crisis?

In the long term, FinTech will play a role in connecting national identity. We will find that the fastest way to help the marginalized populations and provide them with financial services is by leveraging the data they put in their devices. We will be able to provide these services in unconventional ways through their devices.

I think the biggest hope is that the newfound realization during COVID times is that banks understand that digitalization is the way to go and will not fall by the wayside.

Has COVID-19 affected business in Taiwan?

The contact-driven businesses are the hardest hit (hospitality, restaurants, retail etc). But there is growth in e-commerce and delivery-based business. People are adopting new behaviors.

At this particular time, we will face a tipping point in enterprises adopting agile working styles. It’s a good time to figure out what will be the next wave of change in business and investment and pivot accordingly.

Do you think regulators are more open to using broad legislation on crypto blockchain and distributors?

For the crypto, I think it is up to the govt regulations and how different government departments and jurisdictions can work together to move regulation.

What about digital payments?

I will say that we will see China be more aggressive with pushing digital payments. It is targeted more to farmers and retailers who have no access to traditional banking. This will create financial inclusion and equality.

China is using digital payments to try to bypass US dollars and expand its impact on the world. By offering this payment method, it aims to broaden its impact.

How will COVID-19 affect FinTech in Taiwan?

In the post-COVID era, we will see an acceleration of the Chinese currency with the DCEP

If startups and SMEs can ride this wave, there will be interesting opportunities from this.

Regarding Cybersecurity and FinTech, in terms of privacy and encryption protocols, how’s the development looking now?

The idea of privacy has been a sensitive topic. The cyber threats do not only exist in the public domain, but also in the financial infrastructure. Today’s cyber threats attack far more than we have experienced in the past. In Taiwan, our public data is being attacked 30 million times a month. A new trend in the future is end-to-end encryption services: in email, your cloud drive, your collaborative online mechanism and as well as how you store and file and protect your messaging apps.

On the consumer side, we don’t treat privacy seriously enough. Cybersecurity must not be an afterthought. It must be designed from the very beginning.

This is a time for cybersecurity startups to boom or blossom.

Do you see adoption being put in the forefront?

Cybersecurity should be the first thing you think about when you install a financial services app. In terms of the new zero-contact economy, there will be automated transaction services. If you are a bank, ideally, you want to enable as many transactions and as wide as possible.