FinTech and the COVID-19 Pandemic: Evidence from Electronic Payment Systems
Emerging Markets Review (2023) https://doi.org/10.1016/j.ememar.2023.100999
50 Pages Posted: 4 Aug 2020 Last revised: 5 Jan 2023
Date Written: August 1, 2022
This paper investigates the effects of the COVID-19 pandemic on financial institutions and consumers' adoption of FinTech in payments. We find that in Kenya:
1. The COVID-19 pandemic has accelerated the adoption and increase in payment concentration via FinTech. We document an approximate increase of 54% in mobile banking transactions, an increase of 19.56% in mobile banking agents and an increase of 14.56% in mobile banking accounts.
2. The use of all electronic payment cards has significantly declined during the pandemic.
3. The pandemic has magnified interbank contagion and liquidity risks and has reduced both domestic and international electronic fund transfers via both the Real-Gross Settlement system (RTGS) and via the automated Clearinghouse (ACH).
Overall, our results shows that FinTech not only partially alleviated the negative impact of the COVID-19 pandemic during Q1 but that the pandemic has also accelerated consumers' adoption of FinTech and digital onboarding especially in Q3 and Q4.
Keywords: COVID-19, Coronavirus, Fintech, Mobile Banking, Financial Technologies, Banks, Interbank Transfers, Kenya, Africa, Clearing Houses, Financial Stability, Settlement and Liquidity Risks, Pandemic, M-PESA, Digital Banking
JEL Classification: E58, E52, E32, G20, G21, G28, G32, O55, O16, O33
Suggested Citation: Suggested Citation