Something that the COVID-19 pandemic has highlighted is the way in which fintech enabled solutions can support businesses. With everything going on in the world this year, and wanting to plan ahead with confidence and adapt to fast-moving trading conditions, business leaders have been looking for tools that give them a deeper understanding of their company’s financial health.
As lockdowns squeezed cashflow, many companies started exploring how technology can help them manage working capital more effectively. With the virus hastening the adoption of emerging technologies and drive innovation, there are three key areas where the pandemic has shaped fintech trends so far.
Application Programming Interfaces (APIs)
While APIs are by no means a new technology, the pandemic has re-affirmed their value in the commercial banking space. API-driven systems enable faster payments, provide clear working capital and operational benefits to businesses facing COVID-related cashflow pressures, and deliver new propositions that help companies boost their competitiveness in crowded marketplaces and improve their customer experience.
As the pandemic creates a new environment for the application of API-driven solutions, the technology’s wider implementation is continuing to gather pace. APIs are currently being cited as one of the top three tech investment areas in 2021, along with cybersecurity and the Cloud.
The pandemic has made it more important than ever for businesses to have strong insight into their operations, and this is why many are taking a cruder look at the data locked in their systems to gather information they can use amid complex conditions.
Fintech can provide this by helping businesses better understand their financial position through the enabling of greater access to their own banking data. These solutions will also reduce the administration load and allow them to make better financial decisions through real-time cash forecasting, as well as profit and loss information.
Even though the open banking ecosystem is complex and it will take some time to get fully adopted, recent data shows a positive trend in open banking engagement with the number of users of open banking-enabled solutions now surpassing two million, growing through the pandemic and doubling since the beginning of the year. As new propositions are developed, including those that offer businesses enhanced operational insight, we may continue to see an upwards trend in engagement with open banking.
Alliances between Fintechs and Financial Institutions
In recent years, thrilling and rewarding collaborations between fintechs and traditional banks have become more common. This trend has persisted throughout the pandemic and is set to continue, particularly for partnerships that seek to develop solutions for coronavirus pain-points.
The development of new, effective propositions is hugely aided by financial institutions and fintechs drawing on each other’s unique strengths, and the benefits are finally being recognized because, according to date by the Financial Institutions Sentiment Survey, more financial institutions will increase their fintech capability, either through partnering or acquisitions, in the next 12 months
Technology helps companies overcome new challenges, and the COVID-19 pandemic is no different. Financial institutions are waiting for fintechs to develop new offerings in response to the new normal, and they can't wait to start using, along with their customers, these technologies in their day-to-day lives.
Even if the future is uncertain, we are sure of one thing: fintech will continue to play an important part in helping businesses navigate these new times.
About the Author
Joe Torres is the Founder and CEO of DYCSI Inc. He has over two decades of senior management experience in the IT and financial services industry with institutions such as Nacional Monte de Piedad and Banco Actinver.
Joe has seen success with roles in Technology Evolution, Bank Operations, Treasury and Risk Management, Contract and Lease Management and Money Laundry Prevention Systems, Banking Tellers and Emerging Technologies to Deliver Business Value.