How FinTech Can Support Post-Pandemic Business Recovery

It’s no secret that businesses worldwide were caught off guard by the COVID-19 pandemic. Within a few months, the global economy has continued on a downward spiral. According to Euronews, more than 3.9 billion people or half of the world’s population had been subjected to government-imposed quarantines, and  a global recession now looms over various industries. While healthcare workers and policy-makers around the world deal head on with the pandemic, the economy continues to suffer from massive losses. Business owners and laborers alike experience reduced demand and lack of cash flow. The United Nations Conference on Trade and Development says that the prices of global commodities experienced their largest decline in March 2020 with 20.4 percent. Additionally, global poverty can also be expected to increase—and the World Bank warns that 40 to 60 million people are expected to be pushed beyond the extreme poverty boundaries this year. 

The struggle of SMBs

More than the multinational corporations who are experiencing economic losses, small and medium businesses (SMBs) are also feeling the heavy blow. 

SMBs are coping with reduced demand, dysfunctional supply chains, and lack of financing. OECD reminds us that SMBs are crucial to the economy as they make up more than 50% of most countries’ Gross Domestic Product (GDP). They also provide jobs and income for individuals and families. Thus, the owners of SMBs are not the only ones affected by the economic losses.

The end of the pandemic globally remains to be unknown. But helping the SMBs is now an urgent concern because the losses incurred over the past three months have become a real challenge

How can FinTech help SMBs bounce back from the pandemic? 

Prior to the pandemic, SMBs already had their fair share of financial challenges especially when it came to loans and investments. Now, due to the coronavirus crisis, the gap has widened even more. As more countries embark on what they call “the new normal,” it’s very important for SMBs to be able to bounce back from their losses. The good news is, there are available tools and technology that can help facilitate the recovery period for SMBs. FinTech, specifically, provides an array of solutions to help SMBs catch up. Check out some of these solutions:

• Crowdfunding
  Crowdfunding allows SMBs to receive and access much-needed funds to keep their operations running, albeit at a lower capacity than usual. Currently, there are ongoing online campaigns that are rallying support for people who rely on in-person tips for their main source of finances. There are also similar campaigns for service workers and bartenders. Here are pretty cool examples: In Sacramento, the local government partnered with a group of restaurants to allow residents to contribute to the places they would have regularly visited if it weren’t for the pandemic. A couple of crowdfunding and investment FinTech apps are now waiving transaction fees for interested investors. This way, barriers are decreased and SMBs can have additional financial resources. 
• Mobile banking Prior to the pandemic, Outerbox reported that mobile banking was already on the rise with 79 percent of smartphone owners having used their phones for online purchase in the last six months. With the pandemic encouraging less contact with cash, a lot of businesses have started offering mobile banking options. This is set to continue even in the post-pandemic setting. Mobile banking allows for faster transactions while maintaining physical social distancing. Since physical banks have also adjusted their working hours during the quarantine period, more and more individuals have discovered the convenience of mobile banking. Some FinTech apps are offering either discounted or free versions for SMBs that are planning to invest in mobile banking software tools and digital banking. In Ghana, for example, mobile money providers are waiving additional fees for any transactions below $18.
• Alternative lending In recent years, alternative lending has contributed a lot to SMBs by allowing them to get funding without having to borrow from big corporate banks. In fact, an emerging niche in the FinTech industry is offering a faster, more convenient, and more cost-efficient way to help SMBs grow by using advanced technology and artificial intelligence to assess their data and process their loans. These tools will definitely play a huge role during the recovery period from the pandemic. In Europe and Africa, alternative lenders are already starting to boost economic growth by lending as little as $150 to get SMBs back up and running.

The future remains unstable, and more challenges can be foreseen. It’s no longer just about staying ahead of the competition, but it has now become more about resilience and stability. 

If businesses want to remain operational for the next months, it is with utmost importance that they explore creative and out-of-the-box solutions. FinTech has the potential to boost the revival of SMBs. As much as it has been called out to be a disruptor, business owners must come to terms and accept the fact that FinTech can pave the way for a rebirth of the economy.