2020 has been a year of unprecedented disruption across all sectors of business and human activity generally. The financial service sector has not been an exception. Banks have closed, at least temporarily, and many other services that users have come to rely on have had hiccups or slowdowns of varying degrees. For example, many banks were forced to close several branches, which were the primary points of contact for a large proportion of customers.

Digital Payment Services

In a time when e-meetings, e-schooling, e-parties, and a variety of other traditionally-physical activities have been pivoted onto the internet, it’s no surprise that e-commerce has gotten a massive boost recently, especially in light of its previous steady rise. The spike in e-commerce transactions has been drastic in many places, with Italy seeing an increase of 81%, according to Mckinsey & Company, and according to a new report by Digital Commerce 360, the amount spent by customers with U.S. retailers grew 30% ($60.42 billion) in the first six months of this year compared to the same period last year. Payment processing companies have grown in tandem with the e-commerce surge, and there’s still room for more growth as normal activities resume and customers begin to use digital payment services to pay for more things that they would ordinarily have used cash or bank transfers for.

Digital Lending

The wave of business shutdowns and layoffs around the world expectedly resulted in a cash crunch for many individuals and households. Although some governments have given stimulus funds either directly or indirectly, it has still fallen largely to financial institutions to provide loans to individuals and businesses to see them through the period. Fintech companies have been able to surpass their traditional counterparts in this area too, leveraging advanced AI tech to screen applicants and rate their credit-worthiness. These loans have been faster and more convenient for consumers, which is why digital lenders such as Funding Circle and Kabbage saw very high interest by small business owners applying for the Paycheck Protection Program. The evidence points to a continuation of the shift to digital lenders, with companies like Korea’s PeopleFund seeing an increase in older users in their 40s and 50s, as opposed to the millennials who dominated their user base previously.

Source Credit: Entrepreneur