Revisiting pandemic predictions: where are we now?

As pandemic lockdowns became a new reality back in March 2020, our blog post urged that businesses should be prepared for a post-COVID 19 recovery. As we revisit those predictions, it’s evident that world markets have not reached the moment of universal recovery. In fact, concerns regarding the Delta variant are showing us that we might not see a definitive end to the global crisis for a while.

As the Financial Times recently reported, Toyota has been forced to halt operations in Thailand, business confidence is plummeting in Germany, and concerns deepen in the U.S. regarding unvaccinated communities. On the other hand, national unemployment rates in the U.S. dropped to 5.9% in June - almost half the rate of the same period in 2020 - and there has been a widely-reported surge in American entrepreneurialism as a consequence of the pandemic.

The impact of the pandemic on business is therefore complex and changing. But our headline prediction back in March 2020 remains true: businesses that plan ahead will be the ones that survive and thrive. Let’s take a closer look at some of the predictions highlighted by our chief product and strategy officer Darren Beyer.  

The Rise of the Gig Economy: The Future of Work?

One interesting example is the restaurant industry. We predicted that restaurants would undergo immense change and this has certainly played out, as there has been a massive shift from in-person dining to in-home delivery services. Of course, the big winners of this pivot were DoorDash and other food delivery platforms. The growth of these companies is also indicative of the predicted wider reliance on home-delivery services. Amazon fine-tuned the home-delivery model as retailers were forced to close their doors, reporting a record performance in 2020 with annual revenue up 38% to $386 billion - a yearly increase of over $100 billion - and net profits up 84% year-on-year.

Looking beyond the profits, this step-change is also about the future of working. The pandemic created conditions conducive to the growth of the gig economy, as we predicted, with the world relying on gig workers to deliver necessities. Beyond deliveries, the traditional 9-5 white collar model was turned on its head as many sought alternative incomes and even started their own businesses. And, this trend will not disappear. As Forbes reports, gig workers made up 35% of the U.S. workforce in 2020, with estimates that this will increase to more than half by 2023.

This is where the need to plan ahead becomes critical. The evolution in the way we work will create a knock-on effect for industries who had to let workers go when the crisis hit. With lockdowns easing and restaurants being given the green light to reopen their doors, the industry — as well as hospitality and retail services — must plan ahead for the realities of the budding gig economy. The key question remains: how will I compete in the war for talent to maintain my workforce?

The Future of Payments, Beyond the Pandemic

Even as the Delta variant ravages some areas, others are opening up, and the service industries that have been hit hard throughout the pandemic are having a difficult time finding employees. Many restaurants are open for on-premise dining only 4-5 days per week, and most hotels no longer clean rooms daily. With so many employees from those sectors having moved on to other jobs, how do these businesses attract talent? This is precisely the scenario we predicted 18 months ago.

One answer is that business owners can emulate some of the benefits of freelance work for their employees, such as offering more flexible salary arrangements. For example, we are seeing a wave of interest in Earned Wage Access (EWA) providers -- also known as instant pay or on-demand pay, this model serves hourly or low-income workers in particular, allowing them to access accrued earnings ahead of the traditional payroll cycle. With many American workers living paycheck to paycheck under increased financial burdens owing to the pandemic, EWA enables employers to compete with gig companies for employee attention by emulating their payment structures.

Just as EWA smooths the income side of the equation, we are seeing payment solutions evolving to assist companies in capturing sales from cash-conscious consumers who need to smooth the expense side. A recent McKinsey report noted that the already fast growth of the ‘buy now, pay later’ (BNPL) model - or ‘Pay in 4’ - accelerated during the pandemic, “increasing at 300 to 400 percent in 2020 and accounting for about $15 billion in originations,” a figure projected to grow to $90 billion annually by 2023.

And, this projection already seems to be stacking up, with the recent news that Square will acquire BNPL player Afterpay for $29 billion, a 30% premium on the company’s last closing price, no less. This deal is just one in a flurry of activity, which has seen online payment companies and fintechs competing to capture the dollars of consumers seeking alternative financing arrangements at point of purchase online.

But as nascent as the online version of this industry is, it is already ripe for disruption. Traditional BNPL, as odd as it might sound to call it that, focuses on the merchant side. Now, startups are looking to attack the consumer side with innovative offerings that are merchant- and channel-agnostic.

And for all those new entrepreneurs in need of banking services? The rise of ‘bank-in-a-box’ solutions enable small business owners to satisfy all of their banking needs easily and in one place. From basic business accounts, to different kinds of payment vehicles, and even ways to manage employee expenses, all simply and through digital channels.

Final Thoughts: Looking Ahead

Almost 18 months on from the original blog post, it’s clear that our premonitions regarding seismic shifts across industries and the way we work hold true. Further, it is more important than ever for businesses to plan ahead in order to thrive in the new economy, and innovations within the payments industry provide some of the answers.

Qolo’s multi-disciplinary services can help fintechs embrace the future of payments. With decades of cumulative industry experience, we recognize the importance of staying ahead of the evolving payments landscape. We are uniquely positioned to provide core account structures, a multitude of payment and card types, as well as treasury management and general ledger capabilities.

Contact us today to discuss how we can help you plan ahead and thrive in the new economy.

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