The World Economic Forum’s Global COVID-19 FinTech Market Rapid Assessment Study has gathered empirical data from 1,385 FinTech firms, including EAERA, that are currently operating in 169 jurisdictions globally with the aim of helping to understand: the impact of the global pandemic on the FinTech markets, the response of the FinTech industry to the challenges of COVID-19, the most pressing FinTech regulatory and policy issues.
This report was developed in collaboration with the Cambridge Centre for Alternative Finance at the University of Cambridge Judge Business School and the World Bank Group, and supported by the UK Foreign, Commonwealth and Development Office (FCDO) and the Ministry of Finance of Luxembourg.
Regulators observed strong increases in the use or offering of many fintech products and services since the outbreak of the pandemic. In 2020, firms saw an average rise of 13% compared to 11% growth in previous years. The expansion of transactions was noticeably higher in countries with strict COVID-19 lockdown measures, where growth was 50% higher compared to firms who were operating in countries with looser lockdown measures.
Since the onset of the COVID-19 pandemic, there has been speculation about how the still-nascent FinTech industry would fare in a sharp economic downturn.
Conversely, there has been anecdotal evidence suggesting that FinTech is playing an important role during COVID-19; providing finance to micro, small and medium enterprises (MSMEs), facilitating mobile payments and expanding digital financial services to reach unbanked and underbanked populations. However, empirical data to support this is still scarce.
FinTechs operating in jurisdictions with more stringent COVID-19 lockdown measures report facing more operational challenges and higher costs than firms from relatively low-stringency markets.
FinTechs in high-stringency jurisdictions are considerably more likely to report agent or partner downtime (11% vs. 3%), or experience unsuccessful transactions (10% vs. 3%) than FinTechs from low-stringency jurisdictions.
Some FinTechs have benefited from receiving regulatory support during COVID-19, and the study’s findings back this.
Such regulatory measures range from support for eKYC, simplification of customer due diligence and remote onboarding.
FinTechs indicated that they are urgently in need of more regulatory support, such as faster authorization for new activities (indicated by 36% of FinTechs) and streamlined approval for products or services (31%).