It cannot be underestimated how the stock market situation has changed since the Russia-Ukraine war outbreak. The war impacts all spheres, and the price instability accompanied by high inflation may develop into a global problem for the worldwide fintech sphere.
Many outsourcing companies were closely related to Ukraine and Russia due to their outstaff programs or just originating from these two countries. Currently, there is no clear explanation or scheme for the future of the fintech field as the devastating war continues to cause worldwide fluctuations.
Though it is possible to predict the tendencies in the sphere by relying on the analytics of the global market.
First, let us outline the current situation of the investments in Fintech. According to KPMG Pulse of Fintech research, $98 billion were invested in Fintech in the first six months of 2021, and the whole year’s investments amounted to $210 billion. If we are to compare 2020, it can be observed that the double lower figure is $121.5 billion.
Dealroom.co with ABN AMRO Ventures is reported to have raised $32.4 billion in the first quarter of 2022 by investing in startups in the fintech industry. Earlier in 2021, the number was 27% lower, so the tendency is positive, although their funding rose as well.
At this point, it seems reasonable to summarize the probable branches of Fintech that will be at risk due to the war.
While Ukraine undergoes severe armed attacks, it, together with other countries, experiences major cyberattacks intending to disrupt the banking system and further enterprises. The massive malware that targeted Ukraine at the beginning of the war gave rise to the wide-ranging cyber company aiming to eliminate further attacks and fortify software security worldwide. Moreover, the resolution to cyber resistance rallied the most prominent global companies to act more unitedly than it was in recent years.
The cryptocurrency market is affected as a result of the sanctions imposed on Russia in an attempt to cause damage to its economy. The point is that it is possible for Russian entrepreneurs and cryptocurrency holders to conduct digital transactions to bypass the sanctions. This method is widely used by numerous criminal groups and countries when the traditional payment systems are blocked.
On top of that, the war is about to cause so-called digital currency competitiveness. The reason lies in the current questionable position of the dollar as the reserve currency. There is a real chance for cryptocurrency to enter this world and supplant the dollar, making the reserve currency an obsolete phenomenon. Digital assets have proved their stability and security by their decentralized structure and absence of intermediaries so the future may turn unpredictable. In this article, we dwelled upon the topic of upcoming changes in the Cryptocurrency World – follow the link to read more.
Another crypto shift that cannot be passed over: because of the war Ukraine became the first ever country to accept crypto donations. We must admit that these actions impacted the development of fintech companies significantly. The crisis became a catalyst for crypto and NFT technologies to adjust to new circumstances and produce ingenious fintech solutions for software development.
From the Ukrainian perspective, the Digital Banking system turned out to be an indispensable tool for conducting transactions during the war. Apart from this, people who fled the war and moved to other countries posed a question for the local authorities and bankers to facilitate the process of connecting to the banking system as they do not have such obligatory registration data as personal addresses and other financial factors as credit history, individual accounts, etc. Consequently, the banking industry is exploring new technological ways to amplify the scope of getting access to digital banks. Due to this, the need for professional software development in Fintech heightens. And fintech companies must observe how to install innovative solutions to their software to meet their clients’ needs. It can be applied by applying open banking or open KYC strategies to accelerate the procedure and encourage residents to participate in charity events, provide aid for Ukrainian refugees, or any other example of a foundation.
Sanctions caused by the hostilities affected the banking sphere as well. Following a solid and unambiguous corporative policy, the majority of commercial banks exited the Russian market. Notwithstanding the tremendous losses, which amounted to $100 million in the first quarter, and up to $20 million are expected for each quarter of this year, BNY Mellon broke all the connections with the firms of the aggressor.
Both travel and bank stocks experienced a dramatic influence because of the war. Investors are bewildered by the instability of the USA market as major U.S. companies like Signature Bank or PacWest Bancorp have a recession in the market. Mortgage stocks also fell as investors observed and analyzed the situation, suggesting the possible high-interest rates on mortgages. However, traders and investors may anticipate the most appropriate moment to make the investments as it is the safest way to trade due to the inflation figures. Cryptocurrency prices are rather stable and can preserve funds in turbulent times.
In conclusion, the wheel of change is already in motion. The war has an influence on all spheres of the Fintech industry, so the most efficient decision at this stage is to invest in fintech startups that are currently growing. Besides, in times of economic fluctuation, the one thing you can rely on is safety, stability, and productivity. Fintatech Web & Mobile Trading Software Provider possesses all these features and was created to launch the product on time and at the top.
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