Before And After: FinTech vs. Healthcare Covid-19 Crisis Series

This is the first in a series of articles comparing the Covid-19 crisis in Healthcare to the financial crisis in 2008 that led to an industry-shaping boom in FinTech.

The world before the 2008 financial crisis looked different. Most interaction with a person’s financial institution happened inside of a physical branch and most services for an individual were provided by one bank and perhaps one wealth manager. When banks crumbled and the 401ks of average Americans evaporated, we got a small peek into how the meat was made in finance, and we didn’t like what we found.

Having the financial rug pulled out from under them led Americans to distrust the banking industry, even though most consumers didn’t exactly understand what went wrong or how. This distrust and resentment led to what we call the unbundling of the banks. Consumers, seething at their old financial institutions, flocked to new competitors with attractive front end experiences that promised they were different. Increased availability of and access to technology like smartphones and WiFi contributed to an environment where new ideas could take hold. These companies tended to focus on doing one thing well and were either founded just before the crisis and grew stronger through it, or came in the years immediately following the crisis, capitalizing on an opportunity to redefine the industry. Just a few examples:

• Personal finance: Credit Karma 2007, NerdWallet 2009;
• Lending: LendingClub 2006, OnDeck 2007, Kabbage 2009, FundingCircle 2010, SoFi and CommonBond 2011;
• Remittances and Payments: Braintree 2007, Square and Venmo 2009, WorldRemit 2010, Stripe and TransferWise 2011;
• Alternative finance: Indiegogo 2008, Kickstarter 2009, GoFundMe 2010;
• Roboadvisors: Betterment and Wealthfront 2008, Personal Capital 2009

Innovation came to the FinTech industry during a time of trial and strife.

Innovation will come to Healthcare for the same reason .

Through the past 10 weeks, the public has gotten to see how the meat is made in healthcare. Those who might have recently proclaimed America as the greatest, healthiest nation in the world are seeing the cracks and crevasses in our healthcare infrastructure. It is crumbling like our bridges and roads. We are grossly underprepared and under-resourced for this pandemic compared to other countries. Some might say those countries are smaller, they’re dictatorships, they can simply do things we can’t. But they have masks, their medical care providers have outfits that keep them safe, their people are being assisted with quarantine and most importantly, they are testing en masse.

In Thailand, they are taken directly from planes onto buses and shuttled to a central holding location where housing and food are complimentary for 14 days. In Dubai, they are sent to fairly nice hotels where their stay and food are also paid for. In Israel, after voluntarily quarantining, they will send a healthcare representative to your house, fully clothed in safety garb, to administer a test. In other places, locals can get tested when they land after a flight, and can get tested before seeing family members to ensure their safety. They can get tested if they’re not feeling well, or more importantly if they are feeling well.

While the FinTech crisis was not widely understood by laymen, it was felt in the form of disappearing savings and job loss. The architecture that has contributed to this healthcare crisis may be similarly misunderstood by those not in the industry, yet it is felt in a tangible way by those tracking the disease, and by those suffering from it.

This series of articles will seek to compare the current Healthcare Crisis caused by Covid-19 with the Financial Crisis caused, in part, by the bursting of the US housing bubble. It will review the innovation timeline that followed the crisis, and posit where we might expect to see innovation milestones in healthcare, with predictions on the types of startups we will see emerge as winners. I will also interview senior healthcare leaders on what their organizations are doing to address the issues.

To check out the second article in the series, “The Guilty and the Innocent,” click here.

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