People have seen the worst during the pandemic, but now that it has seemingly ended, businesses have started to flourish. People are going back to work, and children are returning to school.
Amidst all this chaos, a lot has changed for some industries – for better or worse. Today we are going to talk about how Fintech entrepreneurs & companies are responding to post-pandemic situations and how they are cashing in on the environment that this pandemic created.
Considering the drastic transformation in how people make transactions, Fintech players saw an opportunity to lean into core banking and introduce products and services that would change the face of banking forever – both for the financial institutions and customers.
The concepts and technology to transform banking have been around for a long time, but it’s the pandemic that has accelerated their adoption. Here’s how Fintech entrepreneurs are using this to their advantage.
Partnership With Traditional Banks - More Than Just a Marriage of Convenience
Given the post-pandemic circumstances, traditional banking is no longer the preferred way of making financial transactions. That’s the reason Fintech companies are partnering with traditional banks to build neobanks or challenger banks – to give customers a seamless banking experience like never before.
A neobank simply means that everything from opening an account to making deposits and fund transfers to card issuing, etc. will be done online without manual intervention. While a neobank may seem like a separate entity, its licensing and compliance regulations are rooted in traditional banking. For example, Chime is a popular neobank in the USA backed by The Bancorp Bank, which is headquartered in Wilmington, Delaware.
With bank API integrations, neobanks offer a wide range of banking experiences to general customers as well as small businesses. These experiences would have been otherwise dull and time-consuming with a traditional bank.
Serving the Gig Economy
The rise of neobanks may be a respite for gig economy workers (which constitute 36% of the US workforce) and individuals in lower socioeconomic conditions that cannot afford to maintain a traditional bank account. Also, borrowing money from a traditional bank is quite complex and time-consuming, owing to the overwhelming paperwork and background checks. This is where Fintech companies are offering groundbreaking products and services to deliver secure, fast, and convenient banking experiences.
The gig economy consists mainly of freelancers and remote workers, which have been on the rise since the pandemic. With the recent great resignation, people are quitting their full-time office jobs and pursuing their passion as gig workers. As the gig economy booms, Fintech entrepreneurs are looking at a plethora of opportunities to cater to this section of society.
Developing Innovative Products and Services
As the economy bounces back in 2021, we have witnessed a lot of changes in almost every industry. How people save, transfer, and invest money is changing, and Fintech companies are taking note of this newly emerged consumer behavior.
More Fintech products and services are being introduced in the market under the following categories:
Lending and Credit
From funding small businesses to allowing peer-to-peer lending without the intervention of traditional banks, Fintech giants are facilitating money transactions through data-driven systems which are secure and more efficient than traditional banks. Kabbage and Lending Club are some examples. And there’s more…
Every financial process starts with credit health, so knowing your credit history and current score is important. Credit Karma lets you check your credit score in exchange for showing you ads for various financial products that you might need.
Mobile Banking and Mobile Payments
Smartphones have made our lives easier. From ordering groceries to booking a taxi ride to navigating streets and everything in between, you can do all these things on your smartphones. Now you have mobile banking too. Platforms like Venmo have quickly become popular among Millennials and GenZ. Seeing the trends, mobile banking certainly has better days ahead of it.
Fintech companies were quick to jump on this trend and produced mobile wallet services and collaborated with traditional banks to offer mobile apps with anywhere-banking capabilities. With contactless transactions becoming a necessity at grocery stores and other retail environments, mobile payments are here to stay.
Insurance and Trading
Insurtech is redefining how insurance companies operate. With innovation and technology at the core, Insurtech companies have managed to churn out more savings and efficiency from the existing insurance model.
They are also making stock trading more accessible for their users. By interpreting Big Data quickly and accurately, fintech platforms allow traders to identify trends and manage risks effectively.
The Covid pandemic is historic, not only because of the mayhem it created but also because of the radical changes it drove in the Fintech industry in such a short span.