Some Fintech companies haven't been able to shield their operations from the bashing of the Coronavirus pandemic. Despite operating an online business, more than eleven Fintechs are among the companies that will be counting their losses, thanks to COVID-19.
This is according to a new report by PricewaterhouseCoopers Nigeria (PwC), which identified Fintech companies that will be severely affected by the economic fallout of the virus outbreak. PwC said the impact level will be determined by the type of services each financial technology firms offer.
Fintech companies to be affected by COVID-19
PwC identified Fintech firms operating loans and payment services. Unfortunately, most of the Fintech companies in Nigeria are operating within these two markets. Fintech companies like Renmoney, Flutterwave, Kudi, Paystack, Carbon, Branch, Paga, Fint.NG, Kwik Money, Zedvance, Aella Credit and many more operate in these markets.
PwC stated that due to the economic downturn, most debtors would be unable to pay their debt as at when due. Debtors won't be able to fulfill their loan obligations as many workers have lost their jobs and had their salary slashed due to the Coronavirus pandemic which is affecting the revenue of other offline companies.
It was also revealed that the Fintech firms in the payment space will have difficulty accessing capital needed to improve their services and expand their operation. This means investment into the payment segment will be low compared to pre-COVID-19.
“The payments segment will be impacted by the decline in global FinTech investments, which could hinder capital required for physical upgrade or expansion of digital infrastructure and services.
"For the digital lending segment, the impact of the lockdown measures on business activities, employers, employees, entrepreneurs, and other entities could affect the ability of lending clients to pay back short-term loan obligations as at when due,” PwC explained in their report.
COVID-19 can still be a blessing for Fintechs
PwC explained that despite the negative impact on Fintech companies operating in the two segments, Fintechs are still well-positioned to take advantage of the disruption caused by COVID-19 in traditional business transactions.
Allness notes that since the outbreak of Coronavirus, most businesses have moved online, compelling individuals and businesses to transact online. This plays to the advantage of Fintechs that are already offering payment solutions.