The pandemic caught the world off-guard. What resulting trends are we seeing in Fintech?

A pandemic that caught the world off-guard forced many companies to simply react instead of having the luxury to implement thought-out strategies. Many in the Fintech industry were not slowed down and were well-positioned to react quickly and provide services to those companies struggling to adapt. As stay-at-home orders across the country were implemented, businesses without an online presence were forced to move online, more consumers moved online and Fintech was working overtime. Here are just a few current trends in Fintech.

Payment Innovations

Interac Corp. reported a record number of e-Transfers in April 2020 and increases in first time users both sending payments and using contactless payments. Statistics Canada reported that e-commerce sales in May 2020 were up 110.08% over May 2019. Mobile payment solutions and contactless payment services helped many businesses survive in the early stages of the pandemic. Consumers are acclimatizing to new payment solutions. As credit card tap limits were increased, the use of contactless payments increased. Payment innovations have been well received and there is potential for further growth.

Blockchain

Blockchain technology is emerging as an important tool to share and aggregate data to create streamlined services. Canadian banks first embraced blockchain technology in 2019 with the release of the visual identity network Verified.me. With blockchain technology embraced by the mainstream, further applications such as shared research, supply chain management and contact tracing are gaining traction. Many Canadian Fintech’s are well poised to take advantage of these emerging blockchain based opportunities.

Financial Inclusion

The concept of financial inclusion is noted by the World Bank as meaning “that individuals and businesses have access to useful and affordable financial products and services that meet their needs”. In many countries, financial inclusion may simply mean access to a bank account. The vast majority of Canadians may have bank accounts. However, many are significantly underbanked and the financial industry cannot lose sight of these consumers. Ensuring equal access for all Canadians to financial services is important for a healthy economy. In a world moving at warp speed to cashless payments and online transactions, ensuring that all Canadian have bank accounts and access to financial services is essential for the economy. With health concerns regarding handling cash, and many vulnerable Canadian who only use cash, the Bank of Canada has issued pleas to retailers to accept cash in order to protect all Canadians. Fintech needs to be aware of this at-risk group and bring vulnerable Canadians away from costly fringe programs, such as payday loans, and serve everyone equally.

While there is a rush to implement new ideas as the country works around the limitations imposed by a pandemic, Fintech companies should not skip the legal review of their programs and ensure they protect their company and intellectual property. Canada’s privacy laws go to great lengths to protect consumers which impose significant requirements on companies. Accurate terms and conditions of use, appropriate disclaimers and policies for web pages and ensuring all necessary privacy consents are obtained are just a few critically important steps for a company to protect itself.