As the Coronavirus outbreak spreads into its third month, the virus is covering much of the world, shutting down entire economies and things could get worse, FintechNZ general manager James Brown says
The global financial markets have plummeted in what could be similar to the Global Financial Crisis, 60 percent of people across Asia are worried for their financial security.
London research data insight company Kantar has just produced a comprehensive report which showed more than a third of Asians feared COVID-19 could push economies to the brink of recession. Koreans are most concerned about their financial health (77 per cent) and job losses (61 percent), the study found.
Consumers and fintech markets are now waking up to the economic threat posed by COVID-19, particularly with no end in sight yet, .
I have spoken to a lot of New Zealand tech and fintech companies and people are definitely and rightly cautious.
People in the industry are wondering if the Reserve Bank should cut interest rates to boost confidence and lower the NZ dollar. Time will tell.
Here in New Zealand, we need to make sure we continue with the support for our small fintechs to help them potentially ride out this storm as they don’t have large balance sheets like the incumbents who can make provisions to reduce cost and keep going.
People will be wondering what the government provision is for companies that were in the middle of launching in a new market but have put it on hold after spending millions of dollars.
Do they have the capital reserve to put this off for months? What monetary value has the government set aside to help small businesses?
Fintech is borderless and globally accessible from right here in New Zealand if we work with our global partners, regulators and governments, this could help boost the economy in these challenging times.
Overseas, companies are telling investors that sales are slumping because of the outbreak, conferences and events have been cancelled and staff are being told not to travel.
Tech companies with direct exposure to China were the earliest to feel the effects. Apple has warned investors that the supply of iPhones would be hampered by the spread of the coronavirus.
Microsoft depends on customers who install its Windows software on laptops and Surface tablets, and both of those hardware products are also being hammered by closings and slowdowns in China.
Organisers called off the annual global telecommunications trade show in Spain, the MWC in Barcelona.
Employees at Amazon’s worldwide operations have been told not to travel domestically or internationally until further notice.
But on the upside, we are likely to see Kiwi companies like Sylo providing more and more secure video and audio communications which helps people working from home.
They are an example just how New Zealand can provide a platform which allows the world to communicate securely while the virus continues to spread and reduce human interaction around sensitive and delicate matters.
Countries like Hong Kong are slowing down across the financial services sector and the G7 ministers are warning of an economic hit.
The coronavirus is already significantly affecting the Kiwi financial sector and the economy.
The impact has begun, but it is uncertain for how long. There are different ways the virus could change the fintech landscape across industries.
It could grow demand for certain insurance types. The virus has resulted in more awareness of insurance and could increase demand for health and life coverage, as well as business interruption and sport, music, conference event cancellation coverage.
Insurances companies are often cautious in what they cover and most don’t include things like a pandemic, certain infectious diseases so the virus should not harm these companies.
For some insurance companies, the virus could be a good thing. Health and life insurance could grow with more people looking to get cover. Insurance for event cancellation will be on the rise.
We are an island nation, so we have some advantages. Technology will keep us connected, secure and sensitive conversations will continue to take place.
Companies with digital products will do really well during this time. Are banks prepared to support their customers that don’t use digital products or have smartphones?
Should the Financial Markets Authority think about removing regulations to help drive and scale fintechs?
Stock markets have been fidgety in the past few weeks, with some New Zealand analysts suggesting or talking about a recession. In the US, the Federal Reserve has already applied an emergency rate cut, which is the biggest since in the US since the global financial crisis (GFC).
A leading global investor Goldman Sachs will from today divide its 38,000-plus global workforce between offices, back-up sites and home in response to deal with the virus.
This comes hard on the heels of rival JPMorgan announcing similar measures to protect staff from Covid-19.
So now in New Zealand, we are beginning to do business in the virtual world by shifting our EQ, rather than shaking hands.
For those that lived through the GFC, it has made us think about the way we made payments and the value of money. COVID-19 could easily lead to re-thinking work and business.
So as long as companies can measure the output and not the input, we will increase our productivity levels, attract more talent and grow investment into New Zealand.
Many of our big fintech companies, such as Xero, Montoux, Vend and TSG will be making smart decisions.
Today, we could say the Future of Work is here and COVID-19 is accelerating and forcing the coming together of digital and physical assets.
FintechNZ is part of the NZTech Alliance which represents more than 1000 businesses and organisations.
For further information contact James Brown on 021 982247