Business intelligence firm Adkit Ltd. claims that the expected decline in Fintech-related investments will not be as severe as we’ve seen during the past few months.
Nadav Pasandi, director and head of financial services at Akdit, confirmed in a report titled, “Fintech in the day after Corona: An extraordinary opportunity for growth,” that COVID-19 has led to about a 20% drop in overall investments into Fintech firms, globally.
This significant decline in investments took place between December of last year and March 2020. The total amount invested in Fintechs reached $6 billion, which is reportedly the lowest for this time period since 2017.
The report noted:
“In our estimate, the downturn trend is expected to continue, but at a more moderate rate than what we saw in the past few months due to the gradual thawing of the markets, especially in the US and Europe and the need by companies to continue the funding rounds that were suspended.”
The report added that the pandemic should lead to the increased adoption of Fintech platforms, and regulators might become more inclined or more flexible when approving business licenses for financial services providers.
Payments and Fintech firms like Intuit, PayPal, and Lendio have all been approved to take part in the US government’s emergency lending program for SMBs or SMEs, which is referred to as the U.S. Small Business Administration’s (SBA) Paycheck Protection Program. The $350 billion small business loan program is a key part of the US Congress’ controversial multi-trillion dollar stimulus package.
The report concluded:
“In our estimate the Coronavirus crisis is expected to increase the cooperation and the merging and acquisitions of fintech companies by the leading financial bodies. Even though the value of fintech companies is expected to drop, the demand for the solutions they provide is expected to increase and their role as significant players in the financial sector will grow.”