Wednesday , December 1 2021

Financial Technology Firms’ Valuation, Profit Level to Decline – PwC Warns



PricewaterhouseCoopers says financial technology firms operating in the payment and digital lending segments are the most vulnerable to the impact on the coronavirus pandemic on the fintech industry.

The company, in its report, stated that COVID-19 would have a disproportionate impact on fintech companies in Nigeria, depending on the segment of operations.

According to analysts at the PwC led by the Chief Economist, Dr Andrew Nevin, the payments segment will be impacted by the decline in global fintech investments, which could hinder capital required for physical upgrade or expansion of digital infrastructure and services.

For the digital lending segment, the report said the impact of the lockdown measures (on business activities, employers, employees, entrepreneurs and other entities could affect the ability of digital lending clients to pay back their short-term loan obligations as and when due.

“COVID-19 and the current lockdown have led to increased usage of digital banking services and online payment platforms for financial transactions. This is due to banks closing some of their physical branches and operating limited physical services to eliminate the risks of transmittal through interactions within the bank, hence transactions have naturally being shifted to online platforms,” the PwC report stated.

According to the report, the situation will be tough with the looming economic slowdown, which is expected to affect transaction volume and value across the economy.

The PwC said, “This would lead to a sharp drop in transaction fees and a decline in valuation and profit-level of fintech firms. Furthermore, banks are equally fortifying their digital capacity to remain relevant in the financial space.”

Analysts at the PwC advised financial service players to provide enhanced digital products, as well as personalised services (digital and non-digital) that could offer significant return on investment.

READ ALSO: PwC Expert Charges FG on Subsidy Removal for Post COVID 19 Economy

They advised the companies to make tough decisions regarding operational efficiencies and tighten internal governance frameworks and strategies on cybercrime mitigation.


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