Helping prepare and adapt to rapid change in digital finance through global crises

The problem

Shocks of various kinds can drive technological adoption in unanticipated ways and cause change in societies and economies. The COVID−19 pandemic certainly accelerated digital finance and fintech adoption, which has important implications for the market equilibrium between traditional and new-tech based players, and, in turn, consumers. Yet there is little documentation that shows who gained most traction during the pandemic period or why.

The research

Fintech in the time of COVID−19: Technological adoption during crises fills this gap by documenting the effects of the COVID−19 pandemic on digital finance and fintech adoption globally – finding a sizeable increase (between 21 and 26 per cent daily) in the rate of finance app downloads. The researchers also analyse the factors that may have driven this on the demand−side to better understand the ‘winners’ from this digital acceleration on the supply−side. Results suggest traditional incumbents saw the largest growth initially, but ‘BigTech’ companies and newer fintech providers ultimately outperformed them over time.

The impact

This global, cross-country analysis of fintech adoption trends during COVID-19 is new data, filling a gap in understanding around how a shock like a pandemic can impact fintech adoption and reshape the competitive landscape overall. Insights into the underlying factors that drive success and failure in the financial sector have various implications for policymakers, regulators, and financial institutions, as well as consumers. They highlight, for example, the importance of updating regulatory frameworks to address new risks and market dynamics; developing policies for enhancing economic resilience during future crises; or, for traditional banks, keeping up with BigTech to remain relevant.

Department: Finance
Area: Technological adoption during crises