By Vanessa Malone
The COVID-19 pandemic has rapidly escalated around the globe, creating economic impacts on top of health impacts that everyone is attempting to navigate.
The stock market is now deep into a bear market. The Dow Jones Industrial Average experienced the biggest one-day drop since 1987, falling nearly 10% last Thursday. Investors are working to mitigate risk and protect their investment capital.
The Horizon team is seeing this firsthand. Take bonds, for example, which are considered a good way to diversify portfolios as they are less volatile in comparison to stocks. Recently, we’ve seen a large uptick in the Ethereum-based bond marketplace Horizon’s compliance and trading technology is powering for A-Rated Brazilian Bank, Piemonte Holding.
During these unpredictable times, people often wonder if emerging technologies such as blockchain, AI, and other fintech and the companies behind them will survive the economic downturn.
Interestingly enough, fintech has done it before. Many large tech companies were born or re-born out of the 2008 recession including household names like Amazon, Netflix, and Groupon; all of which made decisions and technology enhancements to thrive despite the economy.
Here’s a few reasons why we believe emerging technology is positioned to pull through an economic downturn again:
High ability to adapt
New technology companies are highly capable of adapting to the virtual world we’re all being forced to mold into. We are grateful that the entire Horizon development team was able to move to remote working with no reduction in productivity.
In addition, companies like Horizon with high-tech, adaptable solutions and Agile programming methodology are not required to meet customers face to face and can stay in sync virtually.
Inefficiencies are brought to the surface
When the economy is doing well, it’s easier to ignore certain pitfalls in the system. Especially when it comes to long-standing financial institutions, most are reluctant to make sudden, large technology upgrades in attempt to avoid risk and unnecessary cost.
In an economic downturn, the benefits of technological enhancements become glaring as companies attempt to cut costs and increase efficiency. This is when firms turn to innovative fintech tools that streamline traditional processes for both the firms and their users. Maximizing value becomes drastically more important, and this is where fintech providers have a lot to contribute.
In a position to innovate
Where lies inefficiency, lies opportunity. Tech is especially good at being deployed to solve problems, and do this quickly.
Think of the Fintech, Blockchain, Artificial Intelligence, Internet of Things and other technologies that are currently being used to assist in the Coronavirus crisis for instance. China, for example, has turned to blockchain technology to manage medical data, track supply of virus prevention materials and consult the public. Blockchain technologies can also help add transparency and immutability to reports.
Separating from the pack
When the economy is thriving, the market becomes inundated with companies attempting to replicate successful business models and essentially accomplish the same thing.
In an economic downturn, only serious companies with real solutions solving real problems will shine. These are the companies that will ultimately survive and receive funding. In turn, these companies will be able to get a “head start” in the market.
While the economy is in an unpredictable time, we believe fintech is positioned to pull through.
Horizon is a one-stop-shop for securitization, compliance, and secondary trading technology. Horizon is currently raising $5 million in its Series A. To learn more or access our investment materials, please visit https://offering.horizon-globex.com/.