Pandemic effect on fintech industry: trends, numbers, predictions. 

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The overwhelming news about the pandemic, rapid economic changes, and soon-to-be-experienced effects once again push businesses to evolve quickly. E-commerce is already feeling the pressure.

While everyone is talking about “flattening the curve”, what can be done to prepare the business for the inevitable wave of economies crushing and client patterns changing tremendously.

We in Genome decided to analyze what trends and services are the first to follow after the pandemic peak will shift — everything from contactless payments to online merchant services.

Let’s start with the basics — a bank account. Whether people look for a way to open it for personal to business needs, they can stay at home and avoid going to the physical bank. Fintech companies already practiced the online account opening for personal finances with nothing but an ID snap. However, to open a settlement account for your business, for example, was a bureaucracy race, often rigged with inappropriate questions and stereotypical approaches. Now companies like Genome can process your company documents online and get you a fully functional bank account for your business in under 24 hours. In addition to online multi-currency accounts with instant money transfers inside Genome, cross-border, secure SEPA, and SWIFT transfers that will keep the businesses running.

One of the visible and predictable trends for businesses is going to be aimed at reducing the user’s offline contact. So besides the reduction of physical cash (being the perfect tool to spread bacterias), contactless payment is the next in line. MasterCard and VISA practically doubled the contactless transaction limits across 29 European countries. Some European banks (for example, in Denmark, Poland, Hungary, etc. ) followed and already raised the purchase limit with debit cards that allow customers not to enter their PIN manually. Unfortunately, MasterCard still lost around 35% in its shares prices, according to Marketwatch. 

Small and middle businesses are rapidly developing their online distribution channels. While in the U.S., 46% of them sell their goods and services online, that’s not the case for other countries. E-commerce platforms should be ready to broaden their industry coverage and integration options. It’s probably not the best time to be stubborn and stick to the old ways.

The economic downfall that already started and will probably get in its full swing in 6 months is already affecting everything from crediting to investment. Fintech unicorns will have to adjust their prognosis and expectations on expansion and funding dynamically. Liquidity shortage is here to stay for a foreseeable future, so expect cheap merges of acquisition, especially for small companies that will struggle with payrolls due to the lack of cash. Fintech unicorns like Klarna, Tide, Monzo-Starling, Revolut all were highlighted as most likely to suffer from revenue shortage. Reasons? Consumers’ income drop, travel ban, lending crashing — to name a few. 

But let’s get back again more up close and business-oriented. The owners will have to make sure they are ready to handle their financial operation and expansion online: from opening a merchant account to payouts, batch payments, apps, and credit card tokenization. The optimal way for a fintech service provider is to upgrade quickly and cover these requests as a complex. Companies like Genome developed a merchant portal where owners can ultimately oversee the state of their online businesses with transactions, chargeback, approve ratio reports,and even 2nd retry logic, which helps to increase sales revenues. And with direct payouts available, they can skip the middlemen with revenue routing.

Businesses will most likely aim to expand to apps if not already, which means looking for a payment tokenization solution. Tokenization is a replacement process that protects the user’s sensitive payment details. Algorithmically generated number replaces the customer’s PAN (primary account number), which allows to reduce credit card fraud effectively. This method is considered not just safer but also more convenient for the end customer. If businesses have products or services that require attaching credit cards (like delivery services, taxis, municipal services), they usually face limited provider options and have to go through an extensive registration process, even go to the physical bank branch.

For many e-commerce companies, this option will be out of the table for a while, not only because of the circumstances but also because this option is outdated. In Genome, business owners can sign up for business and merchant accounts entirely online, uploading all the required documents. They can also choose from two integration types (host-to-host or hosted payment page), based on the type of integration, cards can be saved and tokenized, meaning that their clients will not have to put their credit card data into the application more than once.

While the time is still turbulent and anyone who says he knows what’s going to happen is frankly delusional, we can gather predictions and expert hypotheses. Analyze trends, examine our strengths and weaknesses, calculating ways to evolve and adapt. Priorities might shift but not the values to take care of personal and business financial needs effectively, no matter what circumstances, locally or globally, we’re in. Discover new possibilities with Genome today and stay safe.

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