“What we’ve seen is that consumers during this period have increased their reliance on digital financial services built by banks but also, importantly, built by non-banks,” Zach Perret, CEO of fintech firm Plaid, told CNN Business.
“I think the pandemic has made it incredibly clear that digital financial services are here to stay,” Perret said.
Breaking the ‘zero-to-one gap’
Some of the fintech firms getting a boost from the pandemic are more obvious than others.
Fintech appears to be reaching new types of users during the pandemic, too.
“The fastest growing demographic in terms of growth of our net new (active users) were those over 50,” Rainey said during the Bank of America Global Technology Conference in June. “That demographic tends to be a wealthier demographic, so we’re seeing higher transaction sizes as it relates to them.”
The pandemic has been a major opportunity because it gave people a reason to try fintech tools that they may not otherwise have used, and they’re likely to keep using them, Perret said.
“People are trying digital finance for the first time,” Perret said. “It’s going from an attitude where people think, ‘I do my banking in person,’ or, ‘I do financial services in person,’ to an attitude of thinking, ‘I could use these digital services.’ Breaking that zero-to-one gap, that’s the biggest gap.”
What’s next for fintech?
While the growing demand for fintech is promising for the industry, concerns about data privacy and cybersecurity could be a hurdle for further growth.
“As digital transformation of financial markets accelerates at breakneck speeds, fintech presents — in equal measure — significant opportunities and challenges for both investors and innovators around the world,” said Scott Joachim, co-chair of Goodwin’s fintech practice and co-author of the report.
It could help that big banks will probably drive much of the innovation in fintech going forward, according to Perret. While consumers may not ditch their physical bank branches entirely, they increasingly want the option to use digital services.
“It’s hard to say that any bank that doesn’t have a digital experience in the next three to five years is going to be a bank that people are particularly excited to work with,” Perret said, adding that many banks are trying to condense what had been three- to five-year technology roadmaps into the next twelve months.
“Startups have built really interesting financial experiences,” he said. “But now we’re seeing a lot of those experiences go mainstream.”