Mille Lees, Monday 16th March 2020, 1:12 PM CET
Coronavirus Impact Fintech

The global pandemic that is the coronavirus has begun affecting all industries worldwide. There have now been more than five thousand deaths, with 138+ thousand being infected globally. Nations are working diligently to ensure that the spread of this virus is slowed down. Statements from the World Health Organization indicate that an economic dive will occur globally in the weeks ahead. It prompted millions globally to stockpile of the requirements for self-isolation enclosures. World governments began admitting that the coronavirus has become severe and that locals should start preparing for potential outbreaks.

When it applies to financial markets, they all began plummeting throughout this week. The S&P500 fell by more than 9.5% during the last 24-hours, with the point valuations dropping by five hundred. Crude oil also saw substantial declines, with expected predictions listing a 32% drop in profits by next week. These adverse effects onto the market haven’t been seen since the crash in 2009. Standard financial markets are drastically feeling the impact of the coronavirus, with digital exchanges experiencing substantial fluctuation in their valuations. Bitcoin began rising at slow rates, which was then met with an immediate decline at 33% throughout a twenty-four-hour period. Since March 9th, the valuation of BTC has dropped from $9,100.00 to $5,100.00. That marginal decline is expected to continue until financial markets return to reasonable assessments.

It should be mentioned that the chaotic and implicating effects of the coronavirus is affecting multiple business-oriented markets worldwide. One of the most affected is the Healthcare Industry, with nurses and doctors forced to work drastically long hours amongst potentially infected citizens or colleagues. It’s creating a hostile environment that is seeing limited testing kits. Affected industries extend to sporting leagues and entertainment content. Hollywood has postponed multiple films to decrease the spread, with sports leagues following similar actions. It appears that the world has entered a standstill until potentially June or July. Financial analysts are concerned about how these prolonged effects will challenge global markets.

The Fintech Industries Impact

Financial analysts within the Fintech industry are beginning to question the outcomes of COVID-19. Some believe that the pandemic could increase the popularity of Fintech trading, with others noting that it’ll most likely damage valuations. Considering that this market space has already begun suffering in the last week, those predictions of damaged assessments are most likely accurate. There have been many travel restrictions imposed globally, with national sporting events being terminated in respective countries like Italy and the United Kingdom. The clientele is more likely to spend funds on protective gear, stockpile groceries, and cleaning supplies. It should be mentioned that multiple large-scale corporations have sent their employees home with pay to ensure the limited exposure of the novel coronavirus or COVID-19.

Financial Impacts Coronavirus

Most investors or traders don’t consider that Fintech has become a globalized sector, which relies on international relationships to ensure standard valuations are kept. Fintech markets worldwide will struggle to maintain these relationships moving forward, with multiple firms and exchanges having to shut down their doors in the coming days. Mass gatherings of 100+ people have been terminated, meaning most offices must be selective with which employees are working. Some argue with practical strategies; the Fintech market could expand following the coronavirus. Considering that expansion is a minimal concern for most Fintech clients, the chances of this happening are minimal.

The Vice President of Tier-1 Financial Solutions, Doug Christiansen, spoke with financial news outlets on the potential effects on Fintech markets. He noted: “The company is looking to potentially do more with technology by thinking about the impact of servicing and managing their client needs to mitigate risk. As our clients put their Business Continuity Plans to test, we expect to see more dependency on software solutions to stay informed and connected to service their end clients. Whether its coronavirus drove change or some other market-moving consideration; we see a greater need for fintech solutions. Increased usage and reliance on technology is inevitable to remain competitive.”

These reflections were noted by Chris Skinner, a Technologist who’s contracted with Tier-1 Financial Solutions. Skinner believes that COVID-19 will act as a catalyst to Fintech markets, ensuring some level of expansion. His statements read: “Everyone is talking about this being a moment to switch to a cashless, cardless society. What we need is for the world to move to mobile payments and facial recognition, like the payment services being rolled out in China. With Alipay today, I can just Smile-to-Pay. That’s not a concept. It’s a reality. We need that to be the future and get rid of touchpads and dirty paper.”

Reformatting Company Strategies for COVID-19 Pandemic

One of the critical benefits that can assist the Fintech Industry is its capabilities to support logistical challenges for health risks. The consultants, developers, project managers and various employees working within the Fintech industry has specific skill sets that enable for home-based workloads to be managed. Similar technologies can be provided to large-scale corporations, allowing their respective employees to work in self-isolation at home. The core factor is prompting financial analysts to recommend that Fintech Firms begin restructuring their operational strategies. Those that follow this advice will be provided with an operational advantage by ensuring a minimal decrease in profits while expanding their brand name throughout various business markets.

Covid-19 Action Plan

The Chief Executive Officer with Promethean, an Infrastructure Firm in Fintech Blockchain provided his insight to local reporters. Aaron Kaplan told financial outlets: “The impact of coronavirus depends on the company, their subsector within Fintech, and how they are organized. Companies in the blockchain space often have developers and personnel located around the world, are more distributed, and therefore should transition more easily to this new reality. Companies that have a centralized office environment, on the other hand, will have a much harder time adjusting.”

Aaron Kaplan finished his remarks by mentioning: “Smaller fintech players are probably better prepared to mitigate business disruption because they are more likely to have more flexible structures that include more remote workers. Even if companies don’t already have the infrastructure in place to allow employees to work from home, it seems that many companies are making quick moves to build this infrastructure.”

Firms Stockpiling Laptops

Reports coming from the Financial Times indicated that European-located firms have begun stockpiling laptops in preparation for employees to work from homes. Computer suppliers like Asus and HP have experienced an influx of orders, ensuring that their profits won’t decrease throughout the upcoming quarter. One Italian-based supplier, who has been unnamed through the Financial Times reports, indicated that they’d had a 10% increase in associated profits. The unknown supplier indicated that more models were sold on March 12th than throughout the entire period of February.

Financial analysts following this influx of sales have noted that mobility and relationship management solutions will define which exchanges remain active throughout this pandemic. It should be mentioned that internal disruptions with these Fintech firms have been minimal, with these firms assessing the COVID-19 situation early-on and placing orders for workers to work from home. The impact on their business operations has been minimal, with unprepared firms feeling the onslaught of this pandemic. It’ll be interesting to learn which exchanges thrive following their technological strategies.

Doug Christiansen from Tier-1 Solutions provided additional statements with financial outlets. He expressed: “As a technology provider, we need to ensure that our technology is accessible and available without restrictions. We’re a cloud-based company; we offer not only on-premise capabilities but off-premise solutions. At Tier1, the dynamic between the buy and sell-side has been evolving to where the buy-side is assuming more responsibility in generating meetings with corporates, so our solutions have reflected that. In the situation we find ourselves in now, mobility and flexibility across fintech and, more specifically, relationship management solutions, will be the difference-maker.”

Education Solutions for Employees

The concern for Doug Christiansen is that Tier-1 Solutions and new Fintech firms won’t have the capabilities to provide on-location services to the clientele. These services are required for exchanges to communicate with consumers and access their data for security purposes. Most Fintech Firms will find it challenging to determine on-location services, with all respective employees being self-isolated within their homes. Christiansen noted that educational programs and flexible schedules would be provided to employees for reassurances. Doug explicitly said that employees will still be required to complete their weekly workloads, with scheduling dependant on their medical conditions. Employees confirmed with the novel coronavirus or COVID-19 will be permitted to not work under their medical condition.

The Head of Marketing for O1 Labs, Claire Kart, provided her remarks regarding employee safety. It was noted that the Coda Protocol is being implemented. The official statement reads: “At our office, we are making sure employees know that we support a flexible work culture, and most importantly, want our team members to feel safe during this time of uncertainty. O1 Lab headquarters are based in San Francisco, a highly cosmopolitan and high-density city with close business ties to China. Multiple locals have tested positive for the virus in the state of California, people are justifiably frightened. We are offering employees the opportunity to self-quarantine through our Work-From-Home Policy.”

Claire Kart continued his remarks, expressing: “During a group meeting, we shared the CDC’s recommendations on preparedness and safety, which includes staying home if you are feeling unwell and paying attention to travel advisories. We also have managers meet to prepare a contingency plan in case the city of San Francisco implements a city-wide quarantine.”

fintech industry

The Chief Operating Officer with Asensys, Michelle Chaung, spoke with financial reporters regarding the educational opportunities for employees. Her remarks emphasized employee safety for the long-term success for her respective company. Those statements read: “Now that over three-thousand lives have been lost to coronavirus around the world, companies and businesses should take steps to protect employees and reduce panic. In the wake of layoffs and disruptions to industry events, we have also assured our employees that their jobs are secure. Emphasizing company values and the importance of each individual’s role in the project are other mindful communication strategies that can be used. In such times of growing uncertainty like we are experiencing with the coronavirus today, all of us will need to be adaptable, resilient, and supportive.”

Fintech Community Considering Philanthropy

Analysts within the Fintech Industry suggest that firms and exchanges begin assisting effected communities with COVID-19 or the novel coronavirus. Implementing a strategy of this nature would create positive relationships amongst these communities for a prolonged period. One financial institution that followed this strategy was Skrill, with them announcing that all foreign exchange fees to Italian Citizens would be terminated going forward. It’s allowed for traders in this region to save substantial funds and use them towards their survival. It should be noted that Italy is the most-affected country next to the Peoples Democracy of China.

Additional corporations following this strategy include Binance. They’ve begun the “Binance for Wuhan Initiative”, which has already started providing medical supplies to 125+ hospitals throughout the Wuhan province. These supplies were also provided to disease control command centres and medical teams throughout China. It should be mentioned that multiple firms have begun providing donations or medical supplies to affected countries, hoping that their funds can limit the spread of exposure or find a cure.

Medical Data Sharing Technologies are being provided by the fintech firm known as Fuzamei. Their blockchain platform has been offered to medical experts, hospitals in effected countries and command centres. Their platform will enable for global information regarding the coronavirus to be available on a single platform. It’s not known how many medical institutions have adopted the MDST Program.

Author: Mille Lees

Millie has been with since the start. She has a passion writing financial news after an internship at Bloomberg London. Millie's background in journalism and politics means she has an eye for a good story. Millie graduated from LSE and has a masters from Durham University England. Mille Lees can be contacted at [email protected], View all posts by Mille Lees

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