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The coronavirus favored the fintech sector and the digitization of Italian banks

The coronavirus crisis has affected all economic sectors. However, the fintech sector managed to thrive, thanks to the confinement measures and social distancing rules imposed by Governments. A new research conducted by EY shows that digital lending registered a huge increase. 84% of Italian banks said they want to speed up the digitization process in the relationship with their clients.

Arturo Garcia

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Fintech companies, which are usually very agile, have on average been less damaged by the coronavirus crisis and have also managed, in some cases, to gain significant market share. Twenty percent of these are even forecasting an increase in turnover. 

Given the hunger for funding and the need to obtain it promptly from companies in difficulty, digital lending has grown a lot, and in some fintech companies it has increased from 100% to 300% in volume. That is highlighted by the new research “COVID-19-Banking challenges and the New Normal” carried out by EY, which analyzes the impact that COVID-19 has had and will have on banks and fintech companies.

Read more about the digitization of banks in Italy and be the first to find out the most important financial headlines with the Born2Invest mobile app.

The increase in online users exploded in March and April

In the meantime, the Italian banks are more committed to digitization. 84% of banks said they want to speed up the digitization process in the relationship with their clients. On the demand side, the use of online banking and mobile apps increased by 33% and 32% and web chat by 14%, while the use of branches fell by 30%.

A survey conducted last April by the Fintech & Insurtech Observatory of the School of Management of the Polytechnic University of Milan through direct sources from 51 banks, found that on average there was a 17% increase in banks’ online consumer-only users compared to the same month in 2019. In addition, online transactions during the month were up 32% and the number of new customers acquired without the need for physical interaction exploded by 75% (with peaks of 198%).

For banks, the increase in online users in March and April was impressive, not comparable to the normal growth trends recorded in previous periods.

In addition, the survey showed the growth in the use of the mobile channel compared to the PC channel by users, and the excellent results in the acquisition of customers by institutions that have carried out online promotions in the first weeks of lockdown.

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Banks must adapt to reap the benefits of the digital revolution

However, the relationship with customers in the “New Normal” seems not to be destined to translate into a 100% digital relationship. EY’s study found that only 16% of customers expect that the new ways of doing banking and interacting with the bank experienced during the lockdown will be permanent. “Customer-centricity” will still be a permanent pillar to refer to. The way of working has also changed for banks: almost 100% of bank employees are now smart working (75% are actually doing it) and web collaboration tools will become structural both in the relationship with the customer and in day-by-day operations.

Filippo Mastropietro, partner in charge of Digital Advisory, Financial Services of EY for Italy, commented: “Banks are facing an unprecedented challenge. Only the most far-sighted will be able to combine transient contingency management with the ability to interpret change as an accelerator of an intense business model evolution process. Digital will certainly play a key role in this evolutionary process.” In particular, the coronavirus emergency has pushed the fintech and insurtech sectors in Italy.

Marco Giorgino, scientific director of the Fintech and Insurtech Observatory of the Polytechnic University of Milan explained: “On the demand side, in addition to the important growth of consumer users on digital banking channels, there is an increase among companies of digital signature services, online systems for the advance invoice or B2B digital payment systems. But the increases are equally significant on the supply side: a large part of the contracts in the last two months have been signed digitally and the compliance constraints seem to have been loosened, which together with the business lines have found themselves in the front line having to manage the emergency to be able to give continuity to the services. Digital investments that were previously frozen have become a priority.” In his view, it is now important to “exploit this positive legacy to reap the full benefits of the digital revolution.”

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(Featured image by StartupStockPhotos via Pixabay)

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First published in BeBeez, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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Arturo Garcia started out as a political writer for a local newspaper in Peru, before covering big-league sports for national broadsheets. Eventually he began writing about innovative tech and business trends, which let him travel all over North and South America. Currently he is exploring the world of Bitcoin and cannabis, two hot commodities which he believes are poised to change history.