One in ten fintech firms are focused on just surviving through 2021, according to a new report published by the FinTech Connect trade show.
The report found that most fintechs were transforming their operations to adapt to the new normal and are relatively confident they’ll make it through the pandemic.
While some accelerated their digital transformation model as a response to the sudden change, a third said they launched new services and were addressing new demand. Some said the pandemic triggered additional growth, while a significant majority (65 percent) said remote working sparked further innovation.
“The spread of COVID-19 has brought the sector’s profitability and long-term business model sustainability into sharp focus—to a point where I believe the path to profitable scale for challenger banks has been structurally altered. But it is not at all to write off the sector,” said Abhijit Akerkar, Non-Executive Director, TBC Bank Group PLC.
“Challenger banks have several long-term advantages—they are native to the digital arena, with more efficient cost structures, organizational agility, and, most importantly, higher customer loyalty. These advantages will help challenger banks weather the storm.”
The report also tackled the Wirecard scandal and sought to uncover how the industry felt about it. While most of the respondents said it had no impact on their business, they did add that they now expected overcorrection from regulatory bodies. They also said they expected less trust from customers, as well as declining investment into the sector.