Cass lecturer explains the challenges and opportunities that the pandemic poses to online lending and payment platforms.

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The coronavirus pandemic has had major implications for global fintech.

Enforced government lockdowns have seen the shutters fall on shops, bars and restaurants all around the world, which has increased our reliance on electronic payments as the most practical – and hygienic – method of completing transactions.

Small businesses have also been increasing their own use of lending platforms to access much-needed emergency funds in this crisis.

So, what does this mean for the sector? Dr Francesc Rodriguez Tous, Lecturer in Banking at Cass Business School outlines the challenges and opportunities for fintech in the current climate.

How has coronavirus affected the use of global fintech?

“The impact of coronavirus on fintech has a number of permutations.

“Even before the crisis, some voices were talking about the ‘fintech bubble’, but the pandemic is providing new opportunities to several players in the industry.

“For instance, peer-to-peer lending platforms have become an important complementary tool for relaying the UK government’s financial support for small businesses, helping them borrow necessary funds during the turbulence of lockdown.

“There has also been a major shift away from cash due to the sharp decline in face-to-face interactions and transactions, as well as the potential to transmit the virus between bank notes and coins. Fintech firms specialising in cashless transactions are seeing the benefit of this through increased use of their services.

“Of course, this needs to be met with effective cyber security measures. In short, different fintech segments are being affected in different ways, and it will be interesting to see which firms are reinforced and which ones lose their edge.”

How much do recent threats to cyber-security due to increased remote working impact fintech providers?

“Cyber-security is an important topic that seems to be overlooked by many customers. One major effective hacking attack to a large fintech platform can compromise the whole industry, damaging consumer confidence and trust in financial encryption.

“The higher the use of online transactions, the more likely we are to see cyber-attacks and cyber-attack attempts. At the same time fintech firms are scaling up investment in cyber-security, and the sector is technologically moving very fast with the emergence of quantum computing.”

Can fintech be stronger than ever as we come through the pandemic?

“The increase in remote working means larger amounts of online data and information are being shared across networks.

“This data can range from our use of video conferencing software like Zoom and Teams, to more frequent online shopping for necessary purchases while stores are closed and online financial transactions to avoid using cash.

“The main advantage for the fintech industry is its use and storage of data such as this which, in principle, should provide further opportunities for firms in the sector while their services are in higher demand.”

Dr Francesc Rodriguez Tous is a Lecturer in the Faculty of Finance at Cass Business School, and a member of Cass’s Centre for Banking Research.

Dr Rodriguez Tous’ research focuses on banking, with a particular focus on banking regulation and systemic risk.

The Centre for Banking Research was founded in 2008, building upon a long history of banking research at Cass Business School. Drawing on the wide experience of core and associate members, the Centre offers expert analysis of economic and business problems that affect the banking and financial sectors.


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