SINGAPORE–(BUSINESS WIRE)–Countries with more developed FinTech ecosystems showed stronger resilience to disruptions from the Covid-19 pandemic, with better economic growth and employment, has a new study that looked at 86 economies worldwide to evaluate the impact of FinTech on economic resilience found.
In collaboration with the Ant Group, the Center for Sustainable Finance Innovation (CSFI) at the Nanyang Business School, Nanyang Technological University, Singapore (NTU Singapore), conducted this study, titled “Economic resilience during the Covid-19 pandemic – the role and importance of FinTech.”
Using GDP growth and unemployment as measures of economic resilience, the study found that countries and regions with more advanced FinTech development experienced a faster decline in GDP growth and recorded stronger employment growth during the pandemic.
The findings suggest that FinTech has a positive impact on economic resilience and can be used as a tool to mitigate shocks and to accelerate recovery in times of crisis. FinTech makes the delivery and use of financial services easy and convenient through platforms such as mobile phone applications and other digital media, which is critical to reducing the disruption caused by lockdowns and other virus control measures that limit physical movement, according to the study.
FinTech and economic resilience
The study weighed FinTech development against a total of 17 factors covering a country’s economic, social, political and health indicators. For example, trade levels, population size and educational development.
The results showed that FinTech had a strong positive impact on GDP growth in all the countries surveyed. Similarly, the more developed the FinTech ecosystem in the country, the lower the unemployment rate. Other factors that also have an influence on positive employment rates include pre-pandemic GDP per capita, the strictness of social distancing policies and population size.
An example of a country in Asia that achieved strong GDP growth resilience is Singapore. As a country with one of the most developed FinTech ecosystems in Southeast Asia, Singapore’s funding landscape has been less volatile compared to other countries in the region, which have largely suffered from a drop in FinTech funding caused by the pandemic. In the case of Singapore, despite an initial slowdown in funding, investment in FinTech quickly picked up again in the second quarter of 2020.
The fact that Singapore has suffered less significantly compared to the rest testifies to the unmatched confidence investors and entrepreneurs have in the country as a regional FinTech hub. This confidence stems from active regulatory support, tax treatment, political stability, adherence to a free market economy and availability of talent, the study said.
Mobile payments
The study also found that different aspects of FinTech caused varied impacts on financial resilience.
Mobile payments, which include common payment tools such as digital wallets, positively affected both GDP growth and employment. Digital investment contributed to GDP growth, while digital banking accelerated employment growth.
An analysis of global Google search data between 2017 and 2022 showed a sharp increase in searches for FinTech-related terms following the Covid-19 outbreak, and the trend has continued since. These terms include “mobile wallet”, “digital banking” and “online investment”. This finding reflects a sustained high interest in FinTech services since the start of the pandemic. In particular, mobile payments are the main driver of interest.
In Southeast Asia, there was a 50% increase in demand for FinTech services from 2019 and 2020, coinciding with the outbreak of the pandemic. Of this demand, interest in mobile payments recorded an 80% increase – in line with the global trend observed in the FinTech services sector.
Despite lockdown protocols, people continued to access daily necessities through online channels. It is therefore no surprise that more people turned to mobile payments and FinTech services to regain some level of normalcy during the pandemic. As a result, Covid-19 has fundamentally reshaped consumption habits and accelerated the development of the digital economy, the study says.
Visit here for the full report:
