Financial Technology in the time of COVID-19
March 24 2020
In recent history we have experienced multiple health outbreaks (Creutzfeldt-Jakob Disease (vCJD), Severe Acute Respiratory Syndrome (SARS-Cov) and Swine Flu (H1N1) that have resulted in a devastating loss of lives and livelihoods. During the SARS outbreak, many states in Asia suffered huge losses especially in the travel and hospitality sectors due to the disruption caused by this virus. Such losses were significant, particularly since they caused interruptions to the manufacturing industry. Today, with the current COVID-19 outbreak, disruption to different sectors nationally and internationally, is ubiquitous.
How can financial technology play a role in minimising the economic damage of the current health epidemic (COVID-19), and moreover, how can it minimise harm to the most vulnerable sectors of society? While health epidemics throughout recent history have had tremendous impacts on national and international economies, FinTechs are increasingly playing a major role in international finance. With the introduction of financial solutions, such as mobile and digital payments, this sector has provided consumers with a convenient service and created a new market that is purely digital.
According to the Centers for Disease Control and Prevention (CDC), COVID-19 spreads through person-to-person interaction and through the use of a contaminated object or surface.
Transmission of the virus via contaminated surfaces can include cash and payment cards. One of the solutions touted to reduce transmission of the virus is by the use of contactless payments, available through a number of debit and credit cards. Another option is to pay using mobile payments. And this is where FinTech innovation and technology could come in play to help curb the transmission of the virus by reducing interaction between uninfected persons and contaminated objects.
While this means most vulnerable – workers in jobs that are most likely to require exposure to the virus – will benefit from not having to handle cash, a key concern is that of access and equality of access – participation in digital economies is predicated on (normally) being a legal resident within a country; papers to verify accounts; non cash-based jobs (i.e. jobs in the formal economy); freedom from coercive relationships that may prevent financial independence, and of course, enough money to be able to open and sustain an account. Ownership of a mobile (usually smart) phone is sometimes also required. Taken for granted by so many residents in the developed world, these privileges are out of reach for so many others.
This blog post will be developed into a working paper, looking at how the FinTech sector, in general, could play a positive role in reducing the impact of health epidemics now and in the future. Contact me here if you would like to collaborate with us on this project.