30 April 2020

The voice of Fintech: What we really think about the coronavirus

The largest urban centres in the world are locked down – streets are deserted, cafes are empty, offices are closed. The City of London, where 3S Money’s headquarters are located, is unusually silent. It almost feels like our primary financial districts have retired for the duration of the quarantine… But that’s not entirely true. Our co-founder Andrei Dikuchine has been speculating on the current situation, asking what’s going on in the financial sector right now and what should the Fintech industry expect when these unprecedented times are finally over?

Financial sector overview: how COVID-19 is shaping Fintech reality

To understand the impact on Fintech, we need to reflect on the overall market. And what better place to start than to ask Professor Market himself:

It’s easy to see that the double hit from the oil sell-off and the COVID-19 pandemic has severely impacted both the energy sector and anything consumer discretionary, while relatively safe-harbour sectors – such as utilities and telecoms – have done well. One caveat, which isn’t evident from the graph above, is that online businesses are prospering during the pandemic for obvious reasons.

Where does Fintech fit into this picture? As expected, banks have been badly affected, but software and services have done okay. So, it seems the answer depends on what kind of business model each Fintech firm has in place and is operating by.

Clearly, those focused on travel and those that are discretionary related have been hugely impacted. We’re hearing devastating rumours that some players have experienced up to 80% loss of their trading revenue.

But anyone who’s in a position to benefit from the new ‘work from home’ reality should be faring well. In this climate, security tech should be thriving. Automation will get another look. Remote learning and training have received a significant boost as many people have time on their hands to study and improve their qualifications. Card processing is up too as people do their shopping online from the comfort of their own homes.

On the pure payments side, success or failure depends on two things: a) how well any given firm is capable of adjusting to working from home when traditional banks are overwhelmed, and b) who your core clients are. Of course, digital Fintech players should all score highly on metric and should be safe in these worrying times, apart from a few hiccups when it comes to reconfiguring call centres and setting up at home. However, the real differentiator is your clients. Your clients can be a double-edged sword: if they’re affected badly by the crisis, then you will be too; but if your clients’ businesses remain stable then, undoubtedly, you will have a competitive advantage.

Further thoughts on the topic, which we feel will be of interest to you, can be found in the following articles:


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