- The coronavirus pandemic will have a lasting impact on the way we bank, shop, and pay.
- Fintechs and investors alike are watching as existing trends toward digital finance accelerate.
- General partners at Andreessen Horowitz, a leading venture-capital firm, expect trends like live-video e-commerce and digital-only banking to stick.
- Andreessen Horowitz manages over $11 billion in assets and has invested in tech giants like Facebook and Lyft, as well as unicorns like Affirm and Stripe.
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The fintech ecosystem is big, and the coronavirus pandemic will have a lasting impact on virtually every player.
From e-commerce to digital-only banking and contactless payments, investors and startups alike have seen ongoing trends accelerate as consumers’ financial lives shift more online.
The legendary venture capital firm Andreessen Horowitz was founded in 2009 by Netscape cofounder Marc Andreessen and Ben Horowitz, who led products at HP, AOL, and Netscape. The firm has over $11 billion in assets under management across several funds and invests across the board from seed- to late-stage companies.
Here’s how two general partners at the firm expect the coronavirus pandemic to change the way we shop, bank, and pay.
Connie Chan, general partner at Andreessen Horowitz
Chan focuses on consumer technology and thinks that while the coronavirus pandemic will negatively affect some retailers, the overall outcome will be net neutral for e-commerce.
“The impact of coronavirus on e-commerce will be mixed,” Chan told Business Insider via email.
A number of factors are at play, including shelter-in-place conditions affecting in-store sales. And much of today’s shopping is being done on delivery-centered platforms like Amazon and Instacart, a trend Chan thinks could stick as the crisis passes.
And while consumers’ discretionary spending is decreasing in some areas like apparel, kitchen-appliance and home-office sales have risen.
“Overall, I think coronavirus is net neutral to ecommerce — people are going to buy less, but online ads are going to be a lot cheaper, and people also have more time to shop online when they’re on their computers all day,” Chan said.
Looking forward, Chan expects that if consumers continue to avoid physical stores and malls, we may see live-video commerce in places other than QVC.
“From a tech and innovation perspective, I hope there will be an acceleration of live video ecommerce, a global trend that’s popular in developing countries but hasn’t become popular in the US yet outside of traditional players such as QVC,” Chan said.
While as-seen-on-TV products like the Shake Weight became internet memes, Chan thinks that the longer consumers shy away from malls and brick-and-mortar shops, retailers will have to get creative and could start experimenting with QVC-style selling.
Livestreaming as a way for merchants to sell products has been growing in markets like China.
“If coronavirus continues to negatively impact foot traffic to malls and physical stores, then brands will need to experiment with live video ecommerce more and test it as a new channel for selling product,” Chan said.
Influencers will also continue to grow as an avenue for retail sales. While influencer marketing has taken a hit during the coronavirus pandemic, creators are still working on content tailored to platforms like Instagram and YouTube. Many industries, like travel, are slowing down their spending on influencer marketing, but fitness influencers are seeing a surge in demand.
Chan expects platform sellers like Amazon to see more competition from social-media channels, on which influencers create content and drive sales, than traditional retailers.
“It’s very possible that Amazon’s future competitors will look completely different than today, looking more like a YouTube or Instagram than traditional retail,” Chan said.
Alex Rampell, general partner at Andreessen Horowitz
Alex Rampell, a general partner at Andreessen Horowitz, focuses on financial-services investments at the firm.
Rampell sees the coronavirus pandemic as a controlled experiment of sorts for digital banking.
“It may be more fun to see a movie at a movie theater, but there’s nothing necessary or better about doing business at a bank,” Rampell told Business Insider.
“COVID represents an A/B test of branch versus branchless banking,” Rampell added, “and almost nobody is suffering from inability to enter a physical branch.”
Digital-only banks like Chime and N26 have earned sky-high valuations for their app-driven banking platforms. These banks don’t lend but offer no-fee checking accounts and debit cards.
Chime, which says it has 8 million open accounts, has seen record sign-ups in the US during the pandemic, Business Insider previously reported. And Germany-based N26, which entered the US market last year, has 5 million customers globally.
Before the pandemic, a consumer survey showed a majority of US consumers expected banks to maintain at least some of their brick-and-mortar locations. Eighty-four percent of respondents reported using mobile banking at least once a week, and 70% said they saw mobile as the future of banking.
Rampell also expects the adoption of contactless payments to speed up.
“Paying with Apple Pay and Google Pay is faster and safer,” Rampell said. “Expect that to stick.”
When shopping in person at essential businesses like grocery stores and pharmacies, consumers have been shifting away from using cash. As a way to limit physical contact in store, contactless payments are on the rise.
While the majority of retailers are equipped with contactless tech, credit-card issuers will have to continue rolling out contactless cards to their customers. In the meantime, consumers can use digital wallets like Apple Pay and Google Pay to tap at checkout.