How badly Has Covid-19 Pandemia shifted the capital raising in the financial sector

The unexpected global coronavirus pandemic COVID-19 has caused rapid changes in the global economic and social environment. Here is more about financial industries and capital flows during the Pandemic. 

The impact of Covid-19 Pandemic on the financial sector

Due to the crisis caused by the COVID-19 pandemic, modern business in 2020 is on the verge of survival. The economic downturn, declining purchasing power and changing behavior of citizens, lack of support from the state have led to a reduction in production or even the shutdown of entire sectors of the economy. During the crisis, the state introduced a strict regulatory policy that created obstacles to work, reducing the profitability of the business. 

Authorities in various countries have imposed emergency measures in the field of health care, severe restrictions on social communication, economic activity, and isolation of the population to combat the spread of coronavirus. Such measures have dramatically affected the activities of enterprises and households, the economy, employment. There was a decline in national economies and an increase in a recession.

Financial shocks of Pandemic

Pandemic financial shocks are associated with additional health care costs, lost business income, company support costs, and social protection. At the same time, the fiscal deficit and public debt service costs are growing, access to international financial markets is limited, and capital is flowing out of developing countries and emerging economies. 

Responses to financial shocks in different countries are to use a combination of monetary and fiscal measures. Typical monetary instruments were: lowering central bank rates to support lending, quantitative easing of the money supply, emergency guarantees and loans, and maintaining bank stability. One of the consequences of the pandemic financial shocks is an additional increase in domestic and international debt.

The development of e-commerce during Pandemic

By the way, today’s events in the context of the global coronavirus pandemic COVID-19 demonstrate the rapid rise in e-commerce and demand for online financial market products. The growing number of mobile users and the proliferation of e-commerce are contributing to the rapid adaptation of digital payments around the world. The number of users of fintech applications in Europe is increasing by about 70% 2 every week, due to the need for social distancing and self-isolation through COVID-19.

The financial market has transformed from a model of the traditional corporate business of banks to an entire ecosystem of banking and non-banking markets over a decade. Transformations are also dictated by new challenges that stimulate the active growth of digital transactions and shape the demand for digital products and services in the financial sector. And one such solution is a Virtual Data Room. Data Room is based on the technological features of information processing in digital form when it is institutionally transformed. It is a secure warehouse for sensitive data and an efficient collaborative tool at the same time.

Stimulating the development of innovation like Data Room software in the financial market to create quality and affordable financial services is based on the following principles:

  • Stability and efficiency. Improving the efficiency of financial institutions can be ensured through the digitalization of the industry;
  • Transparency. Supporting digital transformations in the financial market requires transparent and open regulation, based on equal conditions for the development of innovation for all market participants;
  • Security. Ensuring sustainable development of the fintech industry needs new standards of service provision and protect consumer rights.