The pandemic has had ramifications for many companies, creating uncertain futures for businesses as they work to innovate and adapt to the “new normal.” Covid-19 has only accelerated the reliance on technology adoption, leaving businesses run by legacy systems in the dust. Businesses that have enhanced connectivity during this period have thrived, but worryingly, the current landscape has been largely discouraging for new entrants.
As governments globally are unveiling unprecedented support packages, the risk of punitive taxes on entrepreneurs poses a further threat. As entrepreneurs, we have a duty to influence policymakers and help develop a global pool of talent. With our world now more connected than ever, we can work together to develop ideas and implement practices that will encourage global sharing of entrepreneurial spirit while ensuring that new entrants are not discouraged by the grim backdrop we are seeing today.
While there have been clear winners and losers during this period, I feel that the fintech sector will be the lifeblood of our recovery. During every crisis, there is further opportunity. Some of the best inventions have been created in the darkest of times.
External Pressures On The Sector
Governments globally are scratching their heads on how to reboot the economy during these unprecedented times, announcing massive economic and fiscal packages in hopes of keeping businesses and people afloat. However, some of these actions have had a detrimental impact on the fintech industry.
For starters, many startups that were in their early stages when the pandemic hit are now struggling or, worse, out of business, and obtaining new funding is one solution. Additionally, there is a lag in the number of new entrants, and companies are staying private for longer. M&A activity may slow. Research and development expenditure has been cut as fintechs try to shore up their balance sheets.
Reaping The Benefits Of The Pandemic
Despite the grim outlook, there are glimmers of hope. Where these unforeseen circumstances have caused uncertainty in some areas, others have been booming. The current environment has accelerated the need for financial services to be delivered remotely, as the shutdown has forced people to conduct critical activities online. This is an immense opportunity for financial services providers to instill further trust in their resilience. The market volatility we are seeing has also spurred trading, and we have seen an increase in electronic trading across the world.
Where there was distrust of new technologies, this crisis has shown the force for good technology. Although the current landscape looks bleak, entrants should start their businesses now. This area is ripe for opportunity. For example, now that many businesses have taken operations offline, the talent pool is global. We live in a world more connected than ever, and we should all be taking advantage of that.
Many external factors are out of our control during this period, but one thing remains clear: the fintech sector’s resilience. The question remains: How do entrepreneurs harness this influence to help drive a global recovery and encourage increased innovation worldwide?
Creating Solutions For Change
Here are a few ideas for how to ensure our voices are heard and we are part of the solution. First, from a talent standpoint, we can use our voices to lobby policymakers into creating opportunities for entrepreneurs. Encouraging policymakers to cut income and business taxes and provide tax breaks for fledgling fintech companies will harness and encourage an inflow of talent, giving the sector a competitive edge. After all, we’re also helping grow the economy. As governments try to recoup the losses from support packages, urge policymakers not to inhibit the growth of innovation-led businesses that could speed up the recovery process.
Furthermore, in the U.K., where LMAX Group is headquartered, we are seeing an influx of innovation and talent, but our infrastructure investment is far behind. Businesses can advocate for direct government investment to build up our infrastructure and make the U.K. a global tech hub. Urge the U.K. government to invest in technological infrastructure and become more accommodating to further attract investment and foster innovation in tech-led businesses so existing businesses and new entrants can support the British fintech industry, particularly as the U.K. leaves the European Union at the end of the year.
This can be coupled with reducing the cost of and moving to fast-track entrepreneurial visas. Governments around the world should work to provide incentives for entrepreneurs to move seamlessly by creating a welcoming hub for innovation-led businesses. With a world so connected, we seem to find ourselves missing talent opportunities that could directly help with global recovery.
We should also work on developing our talented employees through funded programs and increase research and development. It might seem counterintuitive to invest in such turbulent times, but now more than ever is the time to put money toward innovative programs rather than miss opportunities for solution creation due to a lack of support.
Entrepreneurs have an opportunity to start leading the way, using the current pandemic as an opportunity to unlock the global talent pool available to them, adapt their businesses to reflect the new environment we live in, and harness their solution-led mindsets to seize new opportunities that can propel them and support their growth while we navigate through this global crisis.
I truly believe that fintech will play a major part in the global pandemic recovery. However, the Covid-19 crisis is already damaging the fintech sector. As entrepreneurs, we need to call our fintech community to work together and create practical, pragmatic ideas to revitalize the sector and keep innovation flowing.
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