Recent global events have reinvigorated demand for digital banking solutions, most of which are already in use by the fintech community. However, this increase in the need and consumption of digital financial solutions cannot solely be attributed to COVID 19. It also cannot be attributed to fintech alone. The changing financial services environment is being propelled by a changing consumer. COVID 19 has simply increased brought the horizon of digital finance closer to present day.

The launch of the Open Banking App Store in the UK by the Open Banking Implementation Entity (OBIE) in June 2020 is a testimonial to the widespread uptake of digital banking solutions. The organization calculates over 1 million Open Banking customers in the UK, doubling in just 6 months: with over 200 regulated providers.

The dynamic horizon of digital banking has a host of different possibilities on what fintech could look like after COVID. With multiple businesses adapting their strategies to deal with the new normal, banks and fintech are no different. The rise of the fintech super app (read ‘Fintech Future: Super Apps’), driven by either digital financial platforms or retail conglomerates is a very real possibility. Another opportunity that exists is the concept of aggregate purchasing, where fintech platforms combine SMB client purchase orders to obtain lower pricing.

Interestingly, this success of neo banks and challenger banks has been brought about by only the digitization of traditional banking services. Unlike music streaming services, there is no real redefining platform in the financial services industry. Removing the barrier between various financial services would truly digitize and democratize the banking world.

With agility being a core strength of emerging businesses, fintech startups have a unique advantage during global disruptions such as COVID. They can adapt to changing circumstances quickly and effectively, unlike their larger counterparts. Disruptions result in the emergence of additional unmet customer needs that can be capitalized upon by the early stage community. Given the emergence of fintech in the previous financial crisis, it can be safely assumed that the sector can and will generate transformative solutions this round around. Below are a few areas where the fintech community can take advantage of their strengths and revolutionize the financial horizon yet again.

Banking as a Service

This forced shift to digital banking services will increase the adoption of white-labeled banking-as-a-service (BaaS) solutions by incumbent banks. These solutions provide an opportunity for traditional banks to leverage available digitization technologies in the financial services world. 79% of global banking executives stated that adoption of such platform business models will help them achieve sustainable differentiation and competitive advantage – across multiple dimensions. They also identified these platform models driving advantage in innovation, profitability, and access to markets. The launch of banking as a service, where customers are provided financial products best suited to their needs, irrespective of the provider, would be a monumental moment in the banking revolution.

Digital Identification

The COVID pandemic has altered in-person banking interactions, impacting the processes designed for the KYC (Know Your Customer) and KYB (Know Your Business) regulations. Digital authentication is now becoming a part of mainstream banking, forming a crucial component of customer on-boarding. The Financial Action Task Force (FATF), the world’s trendsetter in anti-money laundering and fraud prevention, promoted the use of digital authentication. With fintech and insurtech already utilizing digital on-boarding for customers, this shift presents an opportunity for the licensing of this technology to incumbent banking institutions.

Internet of Things

Social distancing norms have bolstered the use of digital payments among global consumers. Companies such as VISA as prioritizing IoT payments to meet the new normal, by tokenizing payment methods for customers. The IoT platform payments are moving beyond humans (phone and watches) to include smart home system devices, automotive systems, and smart cities. Technological advancements ensure that these enhanced conveniences are met with enhanced security and privacy.

Gig Economy

With inconsistent earning patterns, gig economy workers represent a particularly lucrative market segment for fintech platforms. COVID has resulted in a spurt of people relying on internet gigs, especially with small and medium businesses being impacted the most. Their niche requirements in taxation, insurance, savings, and credit pose a perceived risk in the eyes of traditional banks. Platforms such as Steady, are providing gig workers sources of income, while providing additional services catering to savings, healthcare, and taxation.

Financial Inclusion

25% of households in the US are either under banked or unbanked. The World Bank estimates that there are 1.7 billion unbanked people globally, with 75% of them having access to a mobile phone. Fintech platforms, relying mostly on technology and internet access, can transform how banking services are provided to the unbanked. Fintech platforms can also enable the delivery of government backed financial assistance programs.  Their ability to do so was demonstrated by apps such as Venmo and Cash App offering to facilitate digital payments to citizens without bank accounts on behalf of the US government.