Fintech has been instrumental in helping to sustain businesses and households during the pandemic, with scope to be an integral driver of sustainable economic development in the post-pandemic era.
Fintech and COVID-19: Impacts, Challenges, and Policy Priorities for Asia , a book recently published by the Asian Development Bank Institute, the Asian Development Bank, and the Cambridge Centre for Alternative Finance, considers how the global pandemic has accelerated the adoption of digital technology in the financial sector and the role of fintech firms in enhancing economic resilience during the crisis.
The book brings together original research papers presented at a virtual conference  on issues related to fintech and the coronavirus disease (COVID-19) and their implications for economies in Asia and the Pacific, as well as globally. Empirical evidence provided in the book highlights the role of digital financial services in contributing to economic recovery, advancing financial inclusion, supporting micro, small, and medium-sized enterprises (MSMEs), empowering women, and helping low-income households. In addition, it highlights critical structural policy changes needed to ensure an efficient and safe fintech environment that prioritises consumer protection as well as financial stability. It also provides important insights into the types of policies, including on digital infrastructure, digital literacy, and financial regulation.
COVID-19 as a catalyst
The book is set against the context of the role of the pandemic as a potential catalyst  for an accelerated shift toward digital transformation. A recently published survey by the Cambridge Centre for Alternative Finance, the World Bank Group and the World Economic Forum  indicates that at the global level, the pandemic led to an increase in demand and use for digital financial services across fintech industry verticals around the world. For instance, costs associated with cross-border remittances are often considerably lower—as compared to traditional channels—via fintech in digital payments. The lower costs of remittance through digital payment channels were particularly important amid the pandemic for consumers during extensive periods of lockdown.
For countries that were subject to strict COVID-19 confinement and lockdown measures, the demand for digital financial services was even higher, from cashless payments, digital banking, and digital wealth management (i.e., wealthtech) to digital asset custody and exchange. In Southeast Asia, digital payments , digital lending, and digital capital raising channels were also highly utilized during the pandemic by start-ups and MSMEs.
Digital financial services and MSME viability
MSMEs in developing economies in Asia were particularly vulnerable to the pandemic, with many even facing closure. The increased use of fintech during the pandemic has been an important aspect in enabling many MSMEs to remain economically viable, with financial services being faster, more efficient, and cheaper than traditional banking. Fintech adoption helped to ensure business survival and transformation for longer-term sustainable growth.
One of the book chapters examines the experience of Bangladesh, using survey data for 216 MSMEs . The findings show that mobile financial services were important for driving production, sales, and profitability during the pandemic. In particular, access to digital financial services helped to facilitate the stable supply of raw materials required for production. Greater incentives and policies to further promote the adoption of digital finance and utilization of online platforms by MSMEs could enhance further both efficiency and economic recovery for these MSMEs.
Advancing fintech’s role in financial inclusion
A further important dimension brought to the fore during the pandemic was fintech’s role in promoting the empowerment of women and gender-based financial inclusion in Asia. The book examines the role of female banking agents in rural India  in facilitating access to social security transfers using fingerprint-based biometric authentication solutions during the pandemic-related lockdown between March 2020 and July 2020. The importance of further enhancements to digital infrastructure both for transfers of social security payments and other benefits and for addressing gender-focused financial inclusion through targeted financial products and services are stressed as important policy priority areas.
Overall, the book sheds light on the impact of the pandemic on the digital transformation occurring in financial services and the role of fintech in enhancing financial inclusion and supporting the post-pandemic recovery. The empirical evidence suggests that the pandemic acted as a catalyst to accelerate the use, adoption, and trust of digital technology and finance by households, businesses, financial institutions, and credit providers.
In a global context, Asia and the Pacific is at the forefront of digital financial services and fintech adoption, and developing and shaping the right policies and regulatory frameworks to encourage financial innovation whilst protecting consumers, mitigating financial stability risks and fighting cybersecurity will be crucial in the future. In conjunction with investment in future-proof digital infrastructure and the promotion of digital financial education, fintech and other forms of digital financial services can contribute effectively to economic recovery and sustainable growth.