IWL Consulting investment managers have spoken recently on how Covid-19 has accelerated the fintech agenda and how we can expect it to evolve over the coming months.
Investors operating on the frontlines of fintech innovation look at how the global pandemic has altered the already fast-paced agenda of adoption.
Covid-19 has boosted online retail and other associated areas, such as contactless payment, as shoppers adjust to a world of limited physical interaction. But, how much has it really altered and accelerated the investment case for fintech? Will this change in use rescind once the lockdown is lifted globally? Or are many of the trends enacted over the first half of 2020 here to stay?
In the first of a three-part series, IWL Consulting spoke to our highest-rated managers to see how the story will unfold. In this first instalment, we ask if Covid-19 has benefitted fintech and where the precise winners may lie.
WILLIAM FOSTER, HEAD OF INTERNATIONAL TRADING, IWL CONSULTING:
Structural growth potential for digital-made payments remains highly attractive. While digital payment volume growth has slowed over the past weeks, due to lower payment volumes in a number of impacted areas such as travel and hospitality, volumes should generally remain positive and recover and even accelerate quickly thereafter. We anticipate that this acceleration will be driven by two factors: a continued acceleration in online sales and strong growth in contactless payments.
E-commerce is obviously a major beneficiary of social distancing measures. The move from the high-street to online retail, which was already deeply embedded in common culture, will accelerate as a result of the crisis. Retailers’ awareness of the need to offer a smooth and efficient multi-platform solution for their customers has not been rebuffed by the crisis.
Contactless payments is another area that we expect to grow significantly post-crisis, as individuals and retailers become more hesitant about handling physical cash, which is often perceived (quite rightly so) as a potential infection carrier.
Digital and online payment solution providers with a global reputation will always be at the forefront of these structural changes due to their early adoption of e-payment solutions. This apparent crisis will greatly benefit cash-generating and liquid businesses. These companies have been able to demonstrate the utmost reliability under the most demanding of circumstances.
AARON PRICE, SENIOR ASSET MANAGER, IWL CONSULTING:
We feel that the Covid-19 crisis has accelerated the emergence of many fintech opportunities that were already beginning to become prominent. This is especially true on the consumer side, as people increasingly adopt the use of digital solutions for their financial servicing needs.
Generally speaking, we think digital payment companies are a clear winner, as people have been encouraged to move away from cash. This type of companies has also benefited from the recent surge in e-commerce.
Other beneficiaries include digital banking, as a result of physical banks’ branches being closed, and software companies, as businesses have become more reliant on software infrastructure, as they moved to working virtually.
Also, on the consumer side, governments have been encouraging contactless payments as a safer solution during the pandemic and social distancing measures have begun to change people’s behavior regarding the use of digital payments.
IWL Consulting, Asia Square Tower 2, 12 Marina View, Singapore 018961. Please call us on +65 3163 1538 or email us at [email protected] for any further information. Visit our website at www.iwlconsulting.com
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