Practical impact of COVID-19 for FinTech: things to consider

On 11 March, the Ukrainian government restricted business activity involving personal contact with customers, except for banks and insurance companies. The NBU responded with a number of regulatory reliefs for banks. Nevertheless, neither the NBU nor the Financial Services Commission (FSC) provided specific relief for non-banking firms. In our view, given the nature of the ongoing crisis, regulators are most likely to monitor how firms approach (i) operational resilience, (ii) safeguarding from fraud and (iii) fair treatment of customers. Therefore, the senior managers of firms should ensure that they are overseeing and monitoring the impact on these key areas.

Operational resilience

It reportedly did not take companies a lot of time to shift their operations to remote mode. Having said that, some of them spoke about various practical issues that their employees faced (e.g., issues with Internet connectivity and lack of equipment, etc.). Others mentioned difficulties with arranging call centers. After the financial crisis back in 2008, regulators focused on financial resilience. This time, one may expect the focus to be on operational resilience. Thus, some top management of firms commented that no-one has yet tested remote working at such a scale and combined it with self-isolation. Thus, increased working from home, financial instability and heightened risks of fraud are all likely to impact operational resilience. Therefore, regulators may be expected to follow the responses of firms to these new challenges. That is why we recommend that regulated firms have a look at their existing business continuity plans and think about how to address issues arising specifically from COVID-19.


The FSC recently reminded non-banking financial service providers that they constitute part of the critical infrastructure and, therefore, they must ensure that they meet all their obligations to customers and provide the maximum level of security for both staff and customers. In this context, it is worth noting that COVID-19 has led to a wave of new cyber-focused scams. Industry bodies, such as the trade association EMA, have warned of a rise in COVID-19 related scams, including fake charities seeking funds for COVID-19 causes, customized online consulting on new ways to monetize COVID-19, and fraudulent Viber bots distributing fake messages promising compensation, etc. Given that the amount of online interaction has increased significantly, fraud systems and controls are particularly important for FinTech firms. Thus, regulators are likely to be concerned with fraud during this period and expect firms to monitor fraud rates and take swift action where they see new patterns or increases in fraud rates.

Treating customers fairly

One can also expect regulators to focus on fair treatment of customers during a time where many could lose their jobs and struggle with their financial arrangements. Thus, the law was changed recently, prohibiting the increase of an interest rate on a loan product during the quarantine period. When the crisis is over, one may expect regulators to pursue firms who have fallen short in this area. Interestingly, many market participants volunteered to relax various financial covenants imposed on their customers during the quarantine period with the understanding that these would be rather difficult to meet.


By Maksym Hlotov, senior associate at Baker McKenzie – Kyiv

Posted in Covid-19 Guidance