Global funding for FinTech companies has declined to $6 billion the end first quarter (Q1) of 2020, a report by PricewaterhouseCoopers Nigeria (PwC) has disclosed.
The report attributed the development to Coronavirus pandemic which forced investors to divest from different asset classes to strengthen their cash positions.
The report published by PricewaterhouseCoopers Nigeria (PwC) focuses on the changing competitive landscape of the Fintech and banking sector in Nigeria.
It also emphasized that financial technology platforms and SME-lending platforms that have embraced the use of advanced technological tools are in a better position to benefit from the post-COVID-19 effect.
Quoting Finch Capital, PwC said: “There has been a significant decline in corporate VC-led (venture capital-led) investments (global deals by corporate VCs weakened significantly by about 20 per cent in Q1 2020).
“In Q1 2020, global Fintech funding declined to about $6 billion, this is because COVID-19 uncertainties forced investors to divest from different asset classes to strengthen their cash positions.
“Globally, consumer, SME-lending platforms and FinTech platforms that adopt artificial intelligence (AI), blockchain, internet of things (IoT), big data and open banking are the best positioned to benefit from the effect of the pandemic.
“On the other hand, traditional banks with a weak digital presence, in addition to wealth management and foreign exchange-focused FinTechs will experience significant pressure due to de-risking by clients, reduced transaction activity, as well as lower expected activity post-pandemic.”
PwC projects that early-stage firms would be affected the most because they would have to compete with larger FinTech firms and traditional banks.
“The payment and digital lending segments are perhaps, the most vulnerable, particularly because the majority of Nigeria’s FinTech companies operate in both segments,” the report read