Coronavirus - Fintech: What to expect post the COVID19 crisis

• United Kingdom
• Global

• Coronavirus - M and A issues
• Mergers and acquisitions
• Financial services
• Financial services - Digital Financial Services

15-07-2020

2019 marked another stellar year for fintechs. The level of deal activity reached another record high of 439 reported M&A transactions and disclosed deal value of over $130 billion according to Hampleton Partners, almost double of that of 2018 on a like-for-like comparison. Despite some signs of slowdown at the very beginning of 2020, the general expectation was that the fintech market would remain strong throughout 2020. Indications were positive until market growth stalled after the first quarter of 2020 by the COVID-19 pandemic, which has since plunged the world into a global economic recession.

In the first part of 2020, the impact of COVID-19 has been felt globally both in the number of deals and the amounts of funding raised by fintechs. According to CB Insights, “every region except Africa saw a dip in fintech deals quarter-over-quarter”.

However, it is not all doom and gloom and there are reasons to be optimistic for the sector, especially for those fintechs which will manage to weather the lack of revenue and ready access to funding caused by the COVID-19 crisis. Given the unique market conditions created by the crisis in terms of large scale and almost overnight shift to tech-based solutions to financial services, some fintechs will benefit by creating new opportunities for development, increased visibility, funding and long-term profitability. Key drivers for this shift include decline of physical banking, cashless transactions, increased mainstream acceptance of crypto and block-chain solutions, big data analytics and robo-advice solutions.

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