Impact of COVID-19 on the FinTech Industry
In a matter of months, the COVID-19 pandemic has forever changed our world. What started as a global standstill is quickly turning into a race to adapt as new data pours in, and we get a better vision of our new reality. With global productivity still in recovery, we are facing an unprecedented economic downturn that will impact the financial stability of individuals and businesses for months and even years to come. Though short-term recovery plans will enable many to survive the fallout, it will take a long-term outlook for employees and enterprises to thrive in the post-COVID landscape.
In this new normal, robust financial services will be a lifeline for many individuals and enterprises. Companies that provide digital financial services (FinTech) are better placed to take advantage of this situation. FinTech must be prepared not just to accommodate this increased demand but also to scale up their enterprise IT infrastructure while adapting to the new world, just like everyone else.
Established enterprises vs. startups – a David and Goliath situation
FinTech startups are smaller in size, which makes them more susceptible to short-term business disruption. But their size also works in their favor. FinTech startups have a fresh canvas, allowing them to develop a modern, performant FinTech solution without the hassles of migrating from old technologies. This gives them a technological edge, attracting a younger digital-first audience to their services.
In contrast, larger financial institutions have been slow to adopt new technologies due to the monolithic nature of their aging IT infrastructure and services. Rather than developing new technologies internally, larger enterprises often acquire smaller startups and attempt to integrate their systems. Often, the integration fails due to the incompatibility of this mixed pot of hardware and software, resulting in workarounds that compromise both IT performance and security.
For larger enterprises, this highlights the need for a new IT foundation with modern technologies, if they want to compete with new startups. Today’s consumers are expanding their horizons by trusting less established brands while reaping the rewards in the form of better digital experiences. So, while FinTech startups do have a technological advantage, they will need to keep an eye on their capital reserves to make it through COVID-19.
Combating COVID-19 with digital transformation
COVID-19 is forcing the hand of many businesses like no other crisis. The pandemic has also revealed the fragile nature of enterprise IT infrastructures, as they buckle under the weight of increased demand and reduced IT service desk capacity.
Some enterprises may have ‘IT Champion’ initiatives in place for devolution of technical support. While they can ease the service desk burden, only the IT engineers can deal with real problems, as these “champions” have insufficient working knowledge or authorization for IT operations management. This shows urgent demand for IT technical skills at the helpdesk. One of the most promising solutions to COVID-19 is Intelligent Automation (IA). Your staff can be susceptible to the virus, but technologies like AI and ML are immune. And, slowly and steadily, this may be the advent of a paradigm shift in enterprise IT operations management, where enterprises hand over more control to these technologies.
In the words of Ganeshan Venkateshwaran, President of the IT services & consulting firm Trianz:
“Digital-first enterprises are experiencing an unprecedented demand for their services. This demand is guaranteed to take the paper off the hidden cracks in enterprise IT networks, putting business and service continuity at risk. The drop in revenues combined with shrinking margins will drive enterprises to think leaner and smarter.”
We are on the cusp of an AI and ML revolution in enterprise IT and early adopters are set to benefit the most. They will have smaller IT teams with no compromise on productivity. AI and ML will provide holistic 24/7 monitoring and automated remediation, giving these smaller teams more actionable insights than their larger counterparts. Some enterprises may throw human resources at the problem, but tighter margins and increasing costs will significantly reduce the viability of the traditional IT service desk.