Over the past couple of years, fintechs have prioritized growth and customer acquisition over profitability.

Experts at CB Insights tech market intelligence platform believe that the coronavirus pandemic will force fintechs to abandon this business model since funding of the sphere has sharply declined, Bloomchain.ru reports.

In particular, the first quarter of 2020 registered sharp decline in the number of investment deals. While the past 3 years all saw between 200 and 300 deals in the months of December through March, 2019-2020 is seeing between 100 and 200 deals over the same period.

According to CB Insights, at the current pace, funding to fintech companies for the first quarter of 2020 will likely settle at around $6bln - a level not seen since 2017.

The recent poll conducted by “500 Startups” startup accelerator among venture companies and private investors showed that 83% of respondents are already seeing the impact of the pandemic on their investment activities.

As evidenced by almost all asset classes, investors are currently liquidating assets to fortify their cash positions, and fintech companies should be following suit, as raising funding in the current market will likely prove exceedingly difficult - and expensive.

This means that fintech companies will have to tighten their belts, and focus more on profitability and positive cash flow than growth at all costs. A sustained economic slowdown would reduce consumer and business spending more than what has already occurred. In turn, this would result in less transaction-based revenues for many fintech companies.

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