Challenges in fintech in covid impact...by A Case study

1. ANKIT UPADHYAY
MBA(FM)
20GSFC2020039
Case Study :- CHALLENGES OF CORPORATE GOVERNANCE
FOR FINTECH COMPANIES IN A PANDEMIC PERIOD
By : Kashuba Yaroslav
(Doctor in Economy)
(Professor at Institute of Government Management, Ukraine)

2. CASE STUDY :-
• ABSTRACT :- THIS PAPER SPREAD-OUT THE KEY CHALLENGES OF
CORPORATE GOVERNANCE FOR FINTECH COMPANIES IN A PANDEMIC
PERIOD BASED ON THE MODERN TRENDS OF MARKET DEVELOPMENT AND
THE EXISTING OPPORTUNITIES FOR PRIVATE INVESTORS TO SET-UP THIS
KIND OF COMPANY INTERNATIONALLY.
• DUE TO DIVERGENCES ACROSS JURISDICTIONS IN THE GOVERNANCE
REGULATION AUTHOR IDENTIFIED “THE MAIN CRITERIA FOR COMPARISON
OFFSHORE JURISDICTIONS TO SET-UP FINTECH COMPANIES” BY
INTERNATIONAL INVESTORS.
• KEYWORDS :- CORPORATE GOVERNANCE, COMPLIANCE, REGULATION,
COMPANY FORMATION, OFFSHORES, FINTECH, COVID-19.

3. • ACCORDING TO THE ASSOCIATION OF CHARTERED CERTIFIED
ACCOUNTANTS (ACCA), A THRIVING GLOBAL COMMUNITY OF
PROFESSIONAL ACCOUNTANTS ACROSS 179 COUNTRIES, FINANCIAL
CRIME COSTS THE WORLD USD 3,5 TRILLION PER YEAR. IT’S A
HEFTY SUM TO PAY AGAINST THE FLOURISHING BACK-DROP OF A
HIGHLY COMPETITIVE, INCREASINGLY DIGITIZED FINANCIAL
SERVICES WORLD.
• WITH NEW-AGE DISRUPTIVE TECHNOLOGIES PERMEATING THE
BUSINESS OF FINANCE, FINANCIAL CORPORATIONS ARE WITNESSING
AN ALL-TIME HIGH IN FINANCIAL CRIME, CYBER FRAUD AND
VULNERABILITIES.
• THERE IS INCREASING PRESSURE ON THEM TO MAINTAIN LOW-RISK
BUSINESS ACTIVITY AMIDST THE UNRELENTING COVID-19
PANDEMIC.

5. CHALLENGES FACING FINTECH AS COVID-19
BECOMES A GLOBAL CRISIS
• FINTECH, IN EVERY INDUSTRY, IS FACING MAJOR CHALLENGES DUE TO THE CORONAVIRUS
OUTBREAK. BELOW ARE SOME OF THE ISSUES WE ANTICIPATE THE SECTOR WILL EXPERIENCE
IN THE COMING WEEKS AND MONTHS.
• CONFERENCES AND EVENTS POSTPONED - EVENTS ACROSS EVERY SINGLE SECTOR HAVE
EITHER BEEN POSTPONED OR DELAYED INDEFINITELY AS PART OF AN EFFORT TO SLOW THE
SPREAD OF THE VIRUS. POSTPONED EVENTS MARK MISSED OPPORTUNITIES FOR FIN-TECHS
TO DEVELOP RELATIONSHIPS AND FOCUS ON NEW BUSINESS. AS YOU SEE EVERY HIGH LEVEL
MEETING OF PM’S ALONG WITH OTHER COUNTRIES AMBASSADORS BY VIRTUAL MODE.
• VENTURE CAPITAL FUNDING MAY BE IMPACTED - THE MARKETS ARE INCREDIBLY VOLATILE
RIGHT NOW AND IN THE MONTHS TO COME FIN-TECHS MAY FACE CHALLENGES FUND-
RAISING AS INVESTORS RETREAT TO MORE CAUTIOUS POSITIONS. HOWEVER, AS DIGITAL
SOLUTIONS BECOME MORE OF A FOCUS ON THE OTHER SIDE OF THIS CRISIS, FIN-TECHS
THAT CAN WEATHER LEANER FUNDRAISING ROUNDS IN THE NEAR AND MEDIUM-TERM MAY
SEE INVESTMENT BOUNCE BACK STRONGLY ONCE THE WORST OF THE PANDEMIC IS BEHIND
US.

6. • CONSUMERS MAY BE LESS WILLING TO INVEST SAVINGS - FIN-TECHS WITH A
FOCUS ON CONSUMER INVESTMENTS MAY BE IMPACTED BY CONSUMER
WARINESS ABOUT INVESTING DURING SUCH A VOLATILE MOMENT. EVEN THOSE
INVESTORS LUCKY ENOUGH TO BE RELATIVELY INSULATED FROM THE
ECONOMIC FALLOUT MAY CHOOSE TO PUT THEIR MONEY IN SAFER OPTIONS
FOR THE TIME BEING.
• PAYMENTS MAY BE DOWN - FIN-TECHS THAT HANDLE PAYMENTS MAY SEE A
DROP IN ACTIVITY FROM CONSUMERS FEELING THE SQUEEZE OF AN ECONOMY
IN FREEFALL.

7. MODERN CONDITIONS OF REMOTE CUSTOMER SERVICE BY FINTECH COMPANIES DEFINE
NEW AREAS OF INVESTMENT IN PAYMENT INFRASTRUCTURE AND INCREASED
COMPLIANCE RISKS, SUCH AS:
• FINTECH COMPANIES' CAPACITY BUILDING, WHICH INCLUDES PAYMENTS, WEALTH
ADVICE, ALTERNATIVE DATA, LENDING PLATFORMS, AND ACCOUNT CREATION;
• INCREASING COMPETITION BETWEEN FINTECHS IN DIGITAL SERVICES;
• GROWTH OF THE SCALE OF CLIENT BASES OF DIGITAL PAYMENTS;
• HIGH LEVEL OF RETURN ON INVESTMENT IN DIGITAL CHANNELS;
• INCREASING COMPLIANCE RISKS AND EXPENCES IN THE ACTIVITIES OF FINTECH
COMPANIES.

8. • COMPANIES ARE INNOVATING FASTER IN AN EFFORT TO
TRANSFORM THE CUSTOMER EXPERIENCE AND IMPROVE
EFFICIENCY AND EFFECTIVENESS.
• AS EXPERTS MENTIONED, TECHNOLOGICAL
ADVANCEMENTS CONTINUE TO BUILD ON EACH OTHER
AND ARE AVAILABLE TO A BROADER AUDIENCE TO
ADDRESS INCREASINGLY COMPLICATED PROBLEMS.
• INCREASED IN INTERACTIONS WITH INNOVATIVE
TECHNOLOGIES HAVE DESENSITIZED CUSTOMERS AND
WORKERS TO SOUND DATA SECURITY PRACTICES.

9. • FINTECH BUSINESS IS THE MOST ATTRACTIVE FOR INVESTORS DURING A PANDEMIC, AS IT
PROVIDES A HIGH LEVEL OF RETURN ON INVESTMENT AND ALLOWS PAYMENTS, TRANSFERS
AND PURCHASES OF GOODS OR SERVICES REMOTELY. THUS, INTERNATIONAL INVESTORS
AND HIGH-NET-WORTH PERSONALITY ARE ACTIVELY LOOKING FOR WAYS TO MAKE SUCH
KIND OF INVESTMENTS.
• CURRENT TRENDS IN THE DEVELOPMENT OF DIGITAL PAYMENTS ARE A TREND NOT ONLY OF
PRIVATE INVESTORS AND EXISTING FIN-TECH COMPANIES, BUT ALSO FOR REGULATORY
AUTHORITIES OF MANY COUNTRIES. AS WITH ALL BUSINESS AND OPERATIONAL
DEVELOPMENTS, FINANCIAL SERVICES FIRMS NEED TO CONSIDER THE WIDE RANGE OF RISKS
ARISING FROM THE USE OF FIN-TECH AND ENSURE THAT THESE RISKS ARE PROPERLY
CAPTURED WITHIN A FIRM’S RISK GOVERNANCE STRUCTURE AND PROCEDURES.

10. OPPORTUNITIES FOR FINTECH AS THE CRISIS EVOLVES
• GLOBALIZED WORKFORCES ARE POSITIONED TO THRIVE - COMPANIES WITH HIGHER LEVELS OF
GLOBALIZATION AND REMOTE WORK-FORCES ARE BETTER POSITIONED TO SURVIVE AND EVEN DURING
THIS DIFFICULT MOMENT. MANY, IF NOT MOST, FIN-TECHS ARE WELL-STRUCTURED TO CONTINUE TO
OPERATE AT THE SAME CAPACITY AS BEFORE THE OUTBREAK, AND ARE THUS LESS LIKELY TO SUFFER
HIGH LEVELS OF DISRUPTION.
• A PUSH FOR CONTACTLESS SYSTEMS - THERE’S NATURALLY BEEN A LOT OF FOCUS LATELY ON WAYS
TO REDUCE EXPOSURE TO SURFACES WHERE THE VIRUS MAY BE LURKING. ONE TARGET OF THIS FOCUS
IS PAPER MONEY, WHICH CHANGES HANDS MANY TIMES OVER. THE WORLD HEALTH ORGANIZATION
HAS SPECIFICALLY ENCOURAGED THE USE OF CONTACTLESS PAYMENTS. THE PANDEMIC COULD VERY
WELL ACT AS AN IMPETUS FOR GREATER ADOPTION OF THESE SYSTEMS AND FINTECHS IN THIS SPACE
ARE IN STRONG POSITIONS FOR GROWTH.
• COMPANIES WILL MAKE DIGITAL SYSTEMS A PRIORITY - 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.
• POTENTIAL ROLLBACKS TO REGULATION - SOUTH KOREA, ONE OF THE COUNTRIES THAT FELT THE
IMPACTS OF THE VIRUS EARLY ON DURING THE OUTBREAK, HAS ALREADY ANNOUNCED THAT IT WILL
BE TEMPORARILY RELAXING REGULATIONS ON CERTAIN INDUSTRIES IN ORDER TO SPUR ECONOMIC
RECOVERY. FINTECH IS ONE OF THE INDUSTRIES TARGETED AS PART OF THAT RECOVERY PROGRAM.

11. *
THERE’S NO WAY TO KNOW YET EXACTLY HOW THIS CRISIS WILL UNFOLD
AND WHAT THE LONG TERM IMPACTS ON THE FIN-TECH INDUSTRY WILL BE.
FOR NOW WE KNOW THAT FIN-TECHS SHOULD BE PREPARED FOR
CONSUMERS AND INVESTORS TO BE ABOUT SPENDING AT LEAST IN THE
NEAR-TERM. STILL, THE CRISIS SEEMS ALMOST CERTAIN TO WHOLE GLOBAL
INVESTMENT IN CONTACTLESS PAYMENTS AND DIGITAL FINANCIAL
SOLUTIONS, WHICH IS GOOD NEWS FOR FIN-TECHS IN THE LONG RUN.