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Economy post COVID-19 and next steps

Banking and Insurance industries most likely to adopt new business models to battle economy crisis.

The world economy has come to a standstill, as several countries have imposed restrictions on trade and movement across the borders to contain the spread of the virus. COVID-19 is one of the significant contributors to the current economic crises the world has faced in years. Despite the gloomy outlook of people regarding unemployment concerns, and threats of recession; the report by S&P Global rating has somewhat given a hope that the Central banks are most likely to intervene, to prevent the systematic failures of the financial sector and the entire collapse of the economy by injecting liquidity in the system. Such measures are predicted to reduce the risk of economy post COVID-19.

The research report prepared by PwC has revealed a positive outlook for the Fintech industry as it has provided a new operating business model. The study highlighted that the FinTech industry is expected to observe growth trends post Covid-19. The payment systems and online banking services are among the most used services by the people of India to complete a contactless payment while practicing social distancing. The FinTech companies are expected to continue providing their services to ensure a smooth banking and payment system across India. Thus, it is anticipated that digital purchase and payment habits are here to stay and expand further even after things return to its normalcy.

The partner and Leader of Fintech, Vivek Belgavi, asserted that “FinTech sector in India, across startups and incumbents, needs to go beyond liquidity challenges. They need to tap opportunities arising from broader sectoral digitization and changing consumption preferences to stay competitive and well-positioned to capitalize as the economy revives.”

Mastercard in its study conducted between 27 April 2020-17 May 2020 across 15 countries, including India, has revealed that India’s buying habits have changed during the coronavirus period, as nearly 86% of the people prefer to choose the online shopping mode, because of the hygiene concerns. Furthermore, the Shopping Index Report shared by Salesforce alone has shown a 20% increase in the revenue of the e-commerce industry for the first quarter of this year.

Another industry that expects to boost economy post COVID-19 is the Insurance sector. The giant insurance company, Aditya Birla Sun Life Insurance, has already partnered with Paytm and is looking for collaboration with other e-commerce platforms such as Amazon to access distribution channels of insurance through these platforms. The partnership between the insurance companies and top e-commerce companies is unique as it opens multiple avenues for extensive opportunities for other banking products and services, to shift their focus on leveraging the benefits of the e-commerce sector.

In words of Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance,

“The profile of the customers (on these platforms) is typically very different and that will define the size and the value mostly. Considering the number of customers then definitely it could be a large opportunity. These will help increase the penetration of insurance on a pure number basis”.

The outlook for the insurance companies seems positive as well. Given the existing situation of Covid-19, more and more people are looking for options to get insured that can cover the unforeseen mishap due to the pandemic. Therefore, people are getting more concerned about their health and will look for financial security that can support them to cope up with the uncertainty of the global health crises. Thus, the next step to improve the condition of economic systems is to be kept in mind. Majorly, pay attention to the development of those industries that have the potential to grow, such as the payment sector, online banking, e-commerce, and insurance sector, that can provide the much-needed push for the economy post COVID-19.

Despite slowdown of the economy, few industries such as finance, online banking, insurance, and e-commerce can outperform its current performance in the future, as high growth in these sectors is expected, that can help in sustaining and supporting the economy of India post the pandemic.

Jasmine Khan
Jasmine Khan
Jasmine is a writer by passion and profession. She likes to explore new places and learn about different cultures. She loves reading books and watching movies that are intellectually stimulating. In her leisure time, she studies Korean language, and practices modern and traditional calligraphy.
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