Since the beginning of the COVID pandemic in early 2020, consumers and the business community have had to navigate new realities. The pandemic has dramatically changed the ways in which we interact, presenting challenges that were rarely, if ever, previously contemplated. Some industries have been affected profoundly, while others are naturally better suited to withstand the evolving pandemic landscape.

Financial technology (FinTech) companies are a good example of an industry well positioned to thrive in this environment. Given the reduction of in-person interaction across society now and for the duration of the pandemic, the virtual nature of FinTech business models plays to its strengths. FinTech offers solutions in a business environment that now needs to operate while socially distanced.

The ability to provide secure financial services with the click of a button was gaining traction before the pandemic, and this trend is not likely to reverse anytime soon. Macro-Economic Trends The state of the economy is always a factor in financial services, as is the ability of people to pay for the goods and services they are financing.

The unemployment rate stood at 7.9 percent at the end of September 2020, according to the U.S. Bureau of Labor Statistics. While this is an improvement from unemployment’s all-time high of 14.7 percent in April, it still is more than twice as high as it was at the end of 2019. In addition, the economy added only 661,000 jobs in September, suggesting a slowing recovery. Another economic factor to consider relative to FinTech is that charge-offs for unsecured debt are projected to increase due to economic conditions, although that may depend on the nature of future government intervention and how the economy recovers post-pandemic.

In response to these projections, however, some companies are expected to curtail new originations and lower credit limits to reduce the risk of credit lines being drawn to their maximum by people who relied on credit as their incomes were reduced or eliminated. The other wildcard here is the government stimulus, which replaced lost income for many consumers earlier in the year.

How to interpret the effect of this cash infusion on consumers’ ability to make future payments should be considered, along with the possibility of further government stimulus. Social Distancing While many business models have suffered terribly as a result of losing the ability to interact with customers physically, FinTech companies largely never sought to exploit that dynamic. Consequently, there has not been a huge disruption here outside of FinTech companies that provided digital services to industries that rely upon in-person interaction.

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