COVID-19’s impact on Ukrainian FinTech

The COVID-19 crisis is impacting the way Ukrainians work, live and conduct business. For FinTechs, this represents a tremendous opportunity as Ukrainians with low levels of financial literacy and a relatively low usage of available FinTech resources are increasingly turning to mobile banking, online payments and other FinTech solutions, thereby driving a switch from physical retail to e-commerce. The key for them during this crisis period, especially FinTech startups, is to ensure that they are offering products and services that allow Ukrainians to maximize their abilities during a time of quarantine and restricted movement. Moreover, they need to ensure that these products and services are offered in a way that is truly beneficial for consumers while also being profitable for the FinTech itself. In this way, we must modify the age-old expression of “the strongest will survive” to “the quickest and most flexible will survive”.

At the same time, it is important to note that small- and medium-sized FinTechs without the adequate financial reserves may find it difficult to get through the crisis. This could be further exacerbated by an anticipated devaluation of the hryvnia exchange rate (likely to happen by the end of the year). If this devaluation lasts for a significant length of time or is particularly strong, businesses with even the strongest financial reserves could find themselves in difficult positions. Moreover, typical financial resources (i.e. foreign investment) to help small businesses are drying up and are expected to remain significantly down over the next 6-9 months. As such, there will be a big need for local options to pick up the slack, at least in the interim. This includes the absorption of more businesses into existing and ongoing projects as well as well-thought-out state support to help small businesses recover.