The majority of fintechs are optimistic that the sector will recover from coronavirus in a year or less, research has found.
According to a survey by research and content agency Pensar Media, 69 per cent of fintechs think that Covid-19 has had a negative impact on the industry, with challenger banks and online lenders being the hardest hit.
However, 55 per cent expect the fintech sector to recover from the pandemic in a year or less and 43 per cent are more optimistic now than at the start of the coronavirus. This is compared to just 16 per cent who are more pessimistic now than they were at the start of the pandemic.
Senior fintech professionals believe Covid-19 will still cause problems for the industry and lead to more consolidation.
43 per cent expect to see a fall in the availability of funding for fintechs next year and 50 per cent predicted that between a quarter and half of all fintechs will experience financial difficulties over the next 12 months.
Therefore, 46 per cent believe the pandemic will increase the pressure to change or refine existing business models to survive.
And 58 per cent forecast Covid-19 to result in increased M&A activity across the fintech industry, with the payments sector expected to attract the most interest.
“The survey shows that Covid-19 has had an uneven impact on the fintech industry,” said Ben Edwards, co-founder and editorial director of Pensar Media.
“Some businesses are thriving, particularly business-to-business fintechs that provide the digital infrastructure for traditional financial services companies, whose sluggish digital transformation efforts have been starkly exposed by the pandemic.
“On the other hand, some businesses have had a tougher time, particularly fintechs that rely on revenue from activities such as card transactions or foreign exchange fees that have been squeezed by lockdowns and travel bans.
“What the survey responses and our interviews with fintech leaders ultimately underscore is that while there remains uncertainty ahead, the industry has quickly adapted to the new environment and optimism for a speedy recovery is high.”