BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

How Should The Fintech Industry React To A Global Recession?

Ankit Agarwal is a technology expert, fintech leader, and the cofounder and CTO of Hexaview Technologies.

Many economists are predicting that the global economy is on the verge of a recession as central banks raise interest rates to combat persistently high inflation.

A recession occurs when the economy's performance declines for a sustained period of several months and is characterized by a contraction of gross domestic product (GDP), rising unemployment rates and decreased consumer spending. It also includes a decline in stock prices, a weakening of the currency, drops in production, corporate bankruptcies and an increase in unemployment.

Importance Of Fintech For The Global Economy

As technology continues to quickly advance, I believe the innovative solutions provided by fintech companies are becoming even more essential to the financial services industry. A growing tech-savvy audience looks to be served by technological advancements that offer data-driven solutions based on market trends and their behavior. Additionally, this revolution is advancing financial inclusion and broadening services across all industries, helping drive the development of the sector.

Leaders in the fintech industry can promote economic growth by expanding financial opportunities for a variety of industries and by satisfying the needs of a younger demographic. Fintech can also benefit other companies by enhancing payment methods and customer relationship management.

Due to an increased reliance on technology, consumers are increasingly turning to fintech advantages to meet their financial needs. The pandemic has passed, but I believe the potential upcoming recession could be even riskier for the sector than the pandemic itself. Fintechs need to find ways to show other businesses how they can be used to enhance or automate work processes as an integral part of their processes.

Further, I recommend that you keep track of your finances and select secure banking services for your company in these challenging circumstances. The industry may actually benefit from a decline in investment, at least in the long run as many analysts predict that only businesses with genuine goods to sell will survive the squeeze, forcing investors to reassess whom they are backing.

What Does The Recession Mean To Startups And Their Founders?

The economic environment has gone through recessions before, and I don't think the current downturn is that different when we compare the industry's overall performance to earlier years.

From past lessons, during times like these, you must look closely to find a golden egg. Crises are also times of opportunity; they give founders the opportunity to concentrate on creating solid products because they frequently bring to light issues that require long-term solutions. In this climate, startups can devote more of their attention to building rather than perpetual growth.

The harsh reality is that competitive markets also eliminate the hundreds of startups with weak products that clog the market. Leading businesses now have the chance to create an even stronger and wider range of goods and services.

The fintech sector is not an island unto itself. It and the rest of society are intricately connected. Therefore, no one factor alone cannot account for the decline in investment activity. Instead, it is more likely that several factors worked together to cause the fall.

Tackling The Global Recession

We cannot forecast with full confidence how the macroeconomic climate will look in the future. But I think it is undeniable that, at the very least, fintech businesses must discover ways to work more efficiently. It's important to keep the solutions to help clients complete and straightforward.

Fintech companies must continuously invest in their products, not just during times of scarcity, to create long-term differentiation and meet changing customer needs. Larger macroeconomic trends—such as shifting consumer behavior, new rules, rising interest rates and inflation—will always be at play in the fintech sector.

Companies must devise flexible strategies, take calculated risks and learn from their experiments during this time of frequent changes. I believe fintech startups have the opportunity to grow with their customers, even during a downturn in the economy, by paying attention to the problems their organizations solve and listening to their customers' needs.


Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?


Follow me on Twitter or LinkedInCheck out my website