1. How do you imagine the financial sector post-COVID-19?
Covid-19 is an unprecedented event. The Pakistani economy will most likely sustain Rs2 trillion to Rs2.5 trillion losses in just three months, which will lead to an expected 18.5m jobless in Pakistan, and there will definitely be effects seen in the financial sector due to these factors. Furthermore, we will see a significant reduction in new startups which were entering the financial market.
Based on a survey, 68% of companies are uncertain of retaining their current workforce and in three months it may jump to 89%. Similarly, the Pakistan Stock Exchange sheds over 2,000 points, a fall which it will take a long time to recover from. Adding to this, Federal secretary commerce says that exports might face loss in the range of $2 to $4 billion as many export orders have been cancelled.
These factors will have detrimental consequences on the economy. However, it is not all gloom for Pakistan as it is expected that the current account deficit will be reduced from USD13.83 billion to USD 7.5 billion as imports will also be reduced due to favorable oil prices and a reduction in demand. Regardless of the positive points, coronavirus could cost the global economy $2.7 Trillion, and it will be hardest for developing countries to recover from it.
2. What are the challenges and opportunities for Fintech in the current crisis?
Challenges
The fintech sector around the world is in a precarious situation at the moment, as a global economic slump is a difficult thing for a sector so heavily reliant on finance. Investors are skeptical to invest in these times, as capital outflows from emerging-market countries have only totaled around $100 billion over the last two months. 58 of the largest Fintech unicorns may see their market cap decline around 15% because of an expected recession in the coming months. Total losses for these firms would amount to an estimated $76 billion. Deals between fintech firms have plummeted as of late, with the coronavirus pandemic leading companies to focus on liquidity rather than growth. Both domestic and especially international partnerships will be hampered significantly. We at APPS had begun entering the MENA region prior to the outbreak but that has been halted due to the current condition.
Opportunities
Regardless of these negative factors, there are a number of positive opportunities that fintechs can capitalize on. There has been unprecedented growth in fintechs around the world with 72% rise in the use of fintech apps in Europe. China, Italy, India and Germany have seen a 50%, 31%, 55% and 35% increase in eCommerce respectively. PayPal has also generated 13.3% higher net income. As communities continue to promote self-isolation as a means of slowing the spread of the virus and businesses shift to remote work, banks will need to find ways to incorporate better digital solutions. Fintechs are well-positioned to step in to offer solutions to replace legacy systems. Current events may also allow for a possible ease in regulatory requirements.
3. What measures have you taken to support your frontline staff?
As required, PayFast is making sure that the safety of our employees is set to a priority. As a pure tech-based company, all our staff are working from home as much as possible. Our Sales and Retail team is now focused on onboarding merchants acquired through social media / SEO or by identifying merchants online. Their outside movement is now limited to only necessary meetings.
We’ve provided VPN access for certain software to critical staff members such as those who are responsible for product development, settlement, operations, customer support, etc. This is to ensure security and encryption when tackling sensitive information.
We’ve also ensured that the office is only open for staff members if they require critical meetings and even then we recommend if it can be conducted via zoom, if not then the office is opened on request where we have ensured sanitizers are readily available especially at the entrance and have ensured to keep a proper distance between staff.
4. In your opinion, how this pandemic will change the future of digital channels?
Firstly, Cash Payments will lose significance. Due to Covid-19, Anti Cash movements have already begun such as;
● WHO Encourages Use Of Contactless Payments Due To COVID-19
● South Korea’s central bank, the Bank of Korea, has implemented a quarantine policy for physical notes
● Chinese lenders were asked by the government to both disinfect bills and keep them in a safe for up to 14 days
● Federal Reserve has also begun setting aside US dollar banknotes from Asia for 7-10 days before recirculating them into the economy
● Hence there would be a greater need for digital payments like through eCommerce or for contactless payments such as Tap & Pay.
The use of Digital channels for Meetings will become more prominent as observed that Zoom has gained significantly more prominence 78% increase in revenue over the past year to $188m and it’s Share price has risen 67.27%
Things like digital account opening and usage of applications such as mobile wallets, banking applications, internet bank, rather than conventional systems will also be observed as well as Digital Marketing will also see greater exposure, especially on ad expenditure for b2b businesses as major conferences and networking spots, have been either cancelled or postponed entirely due to the lockdown situation.
5. How can you help financial institutions face the COVID-19 crisis?
We have begun working on Tap & Pay. We’re currently working on enabling contactless payments for banks in Pakistan. Furthermore, we are hoping to provide a turn-key solution through which Tap & Pay payments will be ready within just 3-4 months.
Overall, we’re providing a fast and cheaper solution for anti-cash-based payments because we’ve partnered with UPI for enablement of these transactions.
We also have an invoicing Platform which is a solution through which a user can send a unique link to accept digital payments from their customers through Visa / MasterCards and Banks accounts / Mobile wallets. These links can be sent to the customer/clients mobile numbers, email, social media etc.
Nowadays, for e.g., Schools fees usually require to submit challans in branches which obviously lead to long lines. Obviously with the current situation that can’t happen. So through payment links, all fee payments can be accepted by just a link within the comfort of being at homes.
These use cases can be further implemented onto charities, marketing agencies, Mutual funds, etc.
And as always, we are enabling eCommerce by tracking credit cards in circulation are approximately 1.2 million, which amounts to the primary means of accepting digital payments.
This is for account holders directly by entering their Account number and adding verifications and an OTP verification. This way all banks which are untapped for online payments will be applicable through our payment gateway PayFast.
