Covering the period from January 2021 to June 2021, this paper is the second part of a study analyzing the impact of the COVID-19 pandemic – including associated regulatory changes – on financial technology firms (fintechs) in Bangladesh. The first phase of the study found an increase in digital payment usage due to lockdowns. This was associated with an increase in public trust of fintechs. In this follow-up document, the authors analyzed 12 fintechs, categorizing them into three groups.
Early-stage fintechs – which had up to USD 10,000 in monthly revenue – included a payment service provider, an insurance facilitator, a credit scoring provider and a bookkeeping service. This group, whose members each had up to 4,000 customers, struggled at the start of the pandemic, specifically in acquiring customers and with delays in launching new products. In order to cope, they cut costs – reducing their total employee counts by an average of 23 percent. Some reduced pay to minimize layoffs, with senior leadership carrying most of this financial burden. One success story was TallyKhata, whose app helps users maintain business records. The firm partnered with several financial institutions to launch digital credit services, and since the onset of the pandemic, it has grown its customer base by a factor of 25 to reach 2.6 million users.
Members of the next group – growth-stage fintechs – have monthly revenue of USD 10,000 to USD 500,000. These agricultural, peer-to-peer (P2P) and consumer fintechs faced significant losses in revenue and cash-flow problems at the onset of the pandemic. To address cash-flow, they focused on increasing operational efficiency and laid off 10 percent to 15 percent of their employees. Like their smaller peers, most reduced salaries for senior management. Since then, however, most have returned salaries to pre-pandemic levels and hired back two to three times more employees than they had laid off.
The fintechs deemed “mature-stage” in this study have over USD 500,000 in monthly revenue. These firms experienced such rapid growth during the first phase of the pandemic that they struggled to keep up with demand. Their customer numbers grew by factors of three to 20. They hired more employees, and many launched new products, such as free P2P transfers and a service for paying for COVID-19 tests. Nagad, for example, is a firm that facilitates cash-in, cash-out, money transfers and mobile recharge. It experienced an increase from 20 million customers to 53 million.
This is a summary of a paper published by MicroSave Consulting (MSC), October 2021, 40 pages, available at https://www.findevgateway.org/paper/2021/10/covid-19-and-fintechs-bangladesh-impact-and-resilience
By Zachary DeLuca, Research Associate
Additional Resources
Prior phase of this study
https://www.findevgateway.org/paper/2021/03/impact-covid-19-fintechs-bangladesh
Nagad homepage
https://nagad.com.bd/
TallyKhata homepage
https://www.tallykhata.com/
TallyKhata app
https://play.google.com/store/apps/details?id=com.progoti.tallykhata&hl=en
MSC homepage
https://www.microsave.net/
More MicroCapital wrap-ups
https://www.microcapital.org/?s=wrap
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