Financial and Monetary Systems

Agility, resilience and impact: How fintech charted a positive course through the global pandemic

contactless payment - fintech

Fintech fared well during COVID-19 and supported groups traditionally underserved by banks.

Tania Ziegler
Lead in Global Benchmarking, Cambridge Centre for Alternative Finance, University of Cambridge Judge Business School
Bryan Zheng Zhang
Executive Director, Cambridge Centre for Alternative Finance, the University of Cambridge Judge Business School
Ana Fiorella Carvajal
Lead Financial Sector Specialist, World Bank Group
Drew Propson
Head, Technology and Innovation in Financial Services, World Economic Forum
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  • Fintech firms globally reported faster than expected growth during COVID-19.
  • Growth was fastest in jurisdictions with more stringent lockdown measures.
  • Fintech firms were able to serve women, low-income households and SMEs during the pandemic, all groups that have traditionally faced challenges in accessing financial services.

When the Global COVID-19 Fintech Market Rapid Assessment Study provided a snapshot of the fintech market’s performance during the first six months of the global pandemic, the indications were that it had fared pretty well.

All but one of the fintech verticals reported growth in the first half of 2020 compared to the same period in 2019, with some sectors even reporting a 21% year-on-year growth in transaction volume.

But after two years of lockdowns, vaccination programmes and varying levels of governmental intervention, what impact has this had on the fintech industry? And why is this important?

As a follow-up to the initial study, the Cambridge Centre for Alternative Finance at the University of Cambridge Judge Business School, the World Bank Group and the World Economic Forum have jointly published the Global COVID-19 Fintech Market Impact & Industry Resilience Study.

Based on responses from 1,448 fintech firms, operating in 192 jurisdictions, the latest data shows that the fintech industry has been more resilient than the initial study had shown, though its performance was uneven across geographies and verticals.

Factors influencing fintech growth

Ultimately, all verticals except one grew at a faster pace than initially reported in the Rapid Assessment Study, with retail-facing fintech firms surveyed reporting an average increase of 47% in gross values transacted. So what has been the catalyst for this growth against one of the most difficult business environments in living memory?

First, it is important to acknowledge that the level of development of the countries remains a key factor explaining growth. It was observed that firms operating in advanced economies (AEs) still dominated in terms of transaction volume and growth when compared to those in emerging markets and developing economies (EMDEs). The only exception is digital payments (the largest vertical by global transaction volume) where growth rates were higher for firms in EMDEs.

In addition, the data suggests that the more stringent the COVID-19 related lockdown measures applied, the faster the growth of fintech firms, with respondents overall reporting higher increases in transaction values. It also suggests that for retail facing firms, participation as distribution partners of government relief programmes had also been an important factor driving activities.

This bears testament to the capability of fintech firms to utilize digital channels and instruments to deliver financial services, their agility and nimbleness to rapidly pivot their businesses models and launch new products and services.

Global COVID-19 Fintech Market Rapid Assessment Study
Global COVID-19 Fintech Market Rapid Assessment Study Image: World Economic Forum

A catalyst for increased financial inclusion

One of the keenest observations from the responses to the study relates to the potential of fintech to contribute to greater financial inclusion – a much-vaunted advantage that has been difficult to quantify previously.

Although more is needed to understand the full impact of fintech on financial inclusion, the study takes a first step in gathering empirical data, revealing that a large proportion of the clients reported by fintech firms are new customers and from groups that have traditionally faced challenges to access financial services. These groups include women, low-income households and small and medium-sized enterprises (SMEs).

Globally, for most of the retail-facing verticals observed in the study, the proportion of low-income households and women clients served was higher in EMDEs compared with AEs. Indeed, in many fintech verticals, the proportion of low-income households and women exceeds more than 50% of total clients served. For instance, digital payments firms report that the proportion of low-income clients was 55% globally, and 73% when looking at those in EMDEs.

This ability to serve these groups better during a global pandemic links back to the digital nature of the fintech delivery model, for instance, via a mobile phone to reach unbanked and underbanked populations and businesses and offering them more affordable products or services.

The impact of regulation on fintech

Another aspect that could have contributed to the performance observed, was the availability of regulatory support. Generally speaking, fintech firms felt that the regulatory responses during pandemic in their respective jurisdictions was adequate, particularly in respect of measures related to customer acquisition – such as support for remote onboarding, standardization of cybersecurity measures and simplified customer due-diligence.

However, fintech firms considered that there were many areas where more support was needed. For instance, faster authorization or licensing processes and less burdensome supervisory requirements were the key aspects cited by firms as needing more support and streamlined processes.

And there were differences in satisfaction with the regulatory support provided according to the level of economic development, with firms in EMDEs reporting an overall lower level of satisfaction with available regulatory support when compared to their peers in AEs.

This might suggest the need for regulatory authorities in EMDEs to continue working towards the creation of an enabling regulatory environment, striking a balance between the need to support financial innovation and the need to address potential risks to consumers and/or financial stability that these activities can pose.

COVID-19 and fintech operational health

From an operational resilience and financial health perspective, fintechs perceive that their sector has adapted well to the challenges presented by COVID-19, with firms reporting increases in revenue and turnover across all verticals.

Although the study does not assess whether these increases in turnover and revenue offset the reported increases in all costs (except fixed costs), it does record that firms report higher valuations and capital raising activities compared to their forecasts in the COVID-19 Rapid Assessment Study.

Similarly, in keeping with highlights identified in the previous study, fintechs have continued to prioritize making their platforms more secure, with more than a third identifying the enhancement of cybersecurity features and preventing fraud as the main changes to their services in 2020.


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These changes appear to be in response to risk assessments, as these were the two most reported risks in 2019. The changes appear to have been effective, as firms reported lower levels of these perceived risks.

Clearly there are still challenges for the fintech industry, including closer relationships between firms and regulatory authorities – particularly in EMDEs – but this study highlights the resiliency of the sector during the COVID-19 pandemic.

It not only illustrates how fintech firms have risen to unprecedented operational challenges, but also how they can play an important role in the provision of financial services to key customer groups that have traditionally faced challenges accessing such services. This resilience will be essential to weathering additional stressors as current economic and geopolitical uncertainties continue.

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