In recent years, FinTech has been on a tear, recording record levels of funding and valuations. With so many competing in the market, it’s little surprise that most FinTechs have prioritized growth and customer acquisition over profitability. But the COVID-19 pandemic has put an end to that.
Funding has dried up, and FinTechs must now quickly shift their focus to balancing their books and managing their cash flows. For the FinTech space in general, this new landscape means that early-stage FinTechs will have a difficult time as they look to maintain profitability while still having to compete against better-capitalized and larger companies. Moreover, any sustained economic slowdown is likely to reduce consumer and business spending, meaning that FinTechs must compete for an increasingly smaller piece of the pie. While the full implications of how the COVID-19 pandemic will impact the FinTech industry, it is clear that the industry is entering into a new period of less-than-ideal conditions.