Fintechs Designed To Thrive In The Face Of Coronavirus

The coronavirus is expected to fundamentally change the way customers interact with their banks, retailers and other service providers – and fintech businesses, which were built to operate in a fast-moving, digital-first economy, are particularly well-placed to meet their demands through the crisis and beyond.

Since the onset of the virus, businesses have had to grapple with how to protect their staff and customers from infection, which has meant, to a large degree, facilitating remote working arrangements and digital customer service delivery. At the heart of this fundamental shift, is the need to have robust, resilient and flexible technology infrastructure can support this new way of doing business.

Consultant McKinsey & Co, in an article titled Leadership in the time of coronavirus: COVID-19 response and implications for the banks, highlights some of the fundamental changes banking organisations are going to need to make in the way they do business.

“Workplace dynamics and talent management, already evolving in a digitizing world, may be durably changed after an extended period of remote working,” it says. “Likewise, customer routines and expectations may also shift further in meaningful proportions, both in terms of digital adaptation and the expectation for proactive communication and care.” 

However, traditional banks that rely on inflexible, monolithic technology infrastructure will be hard-pressed to make the shifts required as quickly and effectively as digital banks, which are in a far better position to function in these challenging conditions because they were built to be responsive, adaptable and scalable.

These banks operate on decentralised, microservices technology architecture that enables them to respond quickly to changing customer behaviour, preferences, and choices. Their technology is also scalable because is cloud-based, which also enables the systems to be managed off site if need be.

Some of the leading digital banks have already been making the shifts required of them, taking advantage of the fact that, as they operate globally in the digital realm, many of their employees are already comfortable with working remotely across different cities and countries and keeping operations online 24/7.

In an article that reviews how the top three UK digital banks, Monzo, Revolute and Starling, are gearing up for the coronavirus lockdown, Starling Bank chief Anne Boden says: “We’re built on technology that allows us to offer a scalable and resilient service that’s not tied to a particular location and that can continue to be available to customers 24/7,” said Starling Bank chief Anne Boden. Monzo chief Tom Blomfield added: “These kind of situations are the ones that we as a bank have planned very significantly for.”

Given the nature of their offerings and the security threats that all digital operators have to contend with, digital banks have also built systems that operate at the highest levels of security and support continuous testing to ensure they provide continuous delivery.

This contrasts with the traditional banks who are operating on centralised, unwieldy, legacy technology that cannot be adjusted quickly because changing one part of the system affects the others. In Fintechs getting a boost from coronavirus outbreak, Timothy Mayopoulos, president of Blend, a digital lending platform, says:

“The coronavirus is creating an additional sense of urgency for financial institutions that may have been on the fence about investing in digital mortgage technology before.”

According to research made by Velmie, fintech solutions company, the global lockdown could be the last nail in the coffin for those banks who are:

1. Not remote friendly.

2. Prefer to rely on in-house development than taking advantage of the benefits of purchasing prebuilt systems and accommodating the flexibility offered by Application Programming Interfaces (APIs).

3. Stick to on-premises hosting over cloud-based hosting with no clear rationale and benefits to doing so.

4. Rely on their physical presence/branches rather than offering customers digital access.

5. Have complex operational environments that are difficult to manage and maintain.

6. Do not make use of decentralised software teams that are, or are able to, operate remotely.

Adoption of cloud and scalable technology architecture, cloud-based solutions and blockchain technologies is something to help banks to withstand the challenges being posed by the outbreak so that they can continue to operate seamlessly and effectively.