Fintech – OPINION-ED BY MR. MAHMOOD AHMADU – An article published at the end of Q1 2018, in the Raconteur – the business, technology and finance insights publication of the Times group in the UK – noted that instances of customers using banking apps in the UK had risen by 354%, in the previous 5 years. A little over a year later, in July 2019, The Guardian was reporting that 71% of customers, in the UK market, could be expected to be mobile banking app users by 2024.
Compare these unequivocal statistics to those from a very different cross section of users in India, one of the most rapidly changing of all emerging markets, and the numbers are equally staggering. According to TechSci Research, digital banking will grow at a CAGR of over 22% in India, between 2019 and 2024. Taking a global view of the trend towards digital Fintech solutions confirms that the UK and India are not peculiar examples of enthusiastic digitization over the period in question. EY’s Global FinTech Adoption Index 2019 report found that 64% of digitally active consumers across 27 countries were already using digital banking solution – a near doubling of the figure within the previous two years.
However, with the Covid-19 pandemic transforming the economic climate around the world, in very fundamental ways, these reports and estimations – optimistic as they already were, at the time – might well fall short of the real world changes we witness.
An agile solution, for the most vulnerable market segments
Given the social distancing and self-quarantining practices, which have come to be the foremost defence against the spread of the virus, some of the advantages that Fintech solutions present to customers are obvious. However, it’s the post-pandemic reactivation of the global economy that may end up being an even more appropriate context, for a further surge in the adoption of digital banking and payment solutions.
Small and Medium Enterprises (SMEs) represent in excess of half the GDP of most countries and seven out of every ten employment opportunities. Due to their dependence on physical shopfronts and minimally automated production, these have been some of the hardest hit businesses, because of the extended lockdowns the world is currently experiencing. Government relief packages notwithstanding, the long term survival of the crucial section of economic activity depends on the creation of a viable new model, which is compatible with the inevitable limitations the world will be forced to operate within. According to the International Finance Corporation (IFC), a humungous $5.2 trillion per year is required to address the unmet financing needs of SMEs worldwide. Given the existentialist threat that the Covid-19 pandemic represents to these businesses, the urgent need to bridge this gap cannot be overstated.
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