Initially, before lockdowns were made worldwide due to the novel coronavirus pandemic, digital technology in banking was already gaining momentum. The adoption of digital technology has increased in the midst of the current lockdown.
Current trends lead more businesses to adopt emerging technologies, such as electronic payments, which would benefit fintech and other related firms during this pandemic. According to the President of the Singapore Fintech Association, Chia Hock Lai, the extended span of social distance would alter the customer’s and business preferences leading to digital technology; not only millennial and digital awareness, but inclusive of all age groups.
Digital Technology adoption among businesses and financial institutions to accelerate
Industry gurus and academics claim that start-ups, especially those with strong funding, would have to live long enough to enjoy the benefit, and this could turn out to be a challenge if investors expand more cautiously.
Indeed, DBS Bank, headquartered in Singapore, initially approximated to fully digitize one million clients by 2021. This figure was triggered by the safe distance norm and circuit breaker measures that lead individuals online in 2020. The bank is now just 100,000 clients below the target amount.
According to the DBS consumer banking group head:
“We anticipate that Covid-19 could accelerate the digital adoption timeline by years.We can expect this momentum to be maintained. Past studies have shown that customers who pick up digital payments or banking services tend to keep up with them after overcoming the initial inertia, or when they have the impetus… to adopt digital services.”
Fintech startups to struggle to obtain consistent funding
Moreover, according to OCBC Bank’s Head of Digital and Innovations, Pranav Seth, financial transactions increased by a massive 40% in the first three months of this year, compared to the same period last year. In addition, he reported that digital transactions on the PayNow bank’s platform had increased three times, while ATM transactions had decreased by 20% between February and March.
In conclusion, Assistant Professor Wang Xin of Nanyang Business School claims that some financial technology start-ups may face financial challenges due to the current high unemployment rate and credit needs of heavily affected sectors such as airline, hospitality and entertainment.