A lot can happen in a year and the past 12 months have been action-packed. A few surprises this year include the collapse of Thomas Cook, US interest rate cuts times three and a general election in the UK, according to Holly Black, reporting for Morningstar. What will 2020 have up its sleeve for investors?
Black includes the predictions of several fund managers. Here are a few.
Christopher Smart, chief global strategist at investment management firm Barings
Smart says that companies that aren’t embracing technology will fall behind. “We are on the cusp of some very disruptive changes from the Internet of Things. Specifically, we are seeing a convergence of forces around cloud technology, cloud storage, inexpensive sensor technology, mobile networks and data analysis … companies that are not seriously considering how to take advantage of these technologies are likely to be disrupted by competitors who can.”
Nick Langley, senior portfolio manager at Australian-based fund manager RARE Infrastructure
Langley says that climate change will create opportunities, notably where infrastructure is concerned. “We need infrastructure to cope with more volatile climatic events (ice storms and wildfires), to increase the efficiency of infrastructure (development of electricity storage), and reduce wastage (leaking pipes in water networks). We expect infrastructure to be the centrepiece of several governments’ desires to stimulate their economies, while in the US, the election campaign will likely see green infrastructure programmes gain momentum.”
Stephane Soussan, manager of the Food for Generations Fund at CPR Asset Management
Soussan says that the meat-free market will continue to expand in 2020 and new companies will come to the market. “We will see new meat substitutes that are cheaper, more realistic, less processed and containing fewer chemical additives and, while consumer tastes can be hard to shift, I think these products will gain traction. While Beyond Meat is currently the only pure way to access this trend, I think more opportunities will arise as new companies and products come to market.”
Morningstar article
The next wave of banking
Fintech will continue to disrupt the banking sector, according to an article for Forbes by Bob Legters, chief data officer at FIS, a global provider of financial services technology and outsourcing services. In the article, he gives his “realistic predictions”.
First, he believes that there will be a move towards the use of mobile wallets and person-to-person payments – but it won’t be the end of cash. He also mentions that open banking will continue to grow in the US, but won’t take over. “The US is still about three years behind the growth curve in international markets. It will be some time before open banking becomes commonplace (and even longer until the average consumer knows what open banking is and how it impacts their lives),” he writes.
He predicts that online-only, direct banks will up their digital game, but so will traditional financial institutions. “Expect to see an increasing number of financial institutions push traditionally cumbersome parts of the banking process, like the process of arriving at financing decisions, paperwork and disclosures to the back end, and deliver them in a format that puts the least amount of burden on the customer. The result? An intuitive banking experience that’s as easy for the customer as pushing a button on a mobile device to order and pay for groceries,” he says.
Forbes article
Was the crystal ball correct?
At the end of 2018, we published an article for The Review including predictions for the year ahead in financial services.
The article, referring to an American Banker article by Bob Legters, says: “Contactless technology will move financial services closer to becoming plastic-free, but not entirely. Credit cards are still important for consumers, but banks will move to improve the user experience through refining contactless technology and other financial institutions will roll out contactless technology when current cards expire.”
Legters’ safe prediction that we won’t be plastic-free is of course correct. But a blog by Visa reports that more than 45% of Visa in-store transactions outside of the US are now contactless, and in Poland, nearly 100% of all merchants are accepting Visa contactless payments. More news from Visa also sees customers lauding contactless for making commuting better – 49% in a survey of 2,000 UK adults say contactless payments are the single most significant improvement to their overall travel experience.
Also, research from UK Finance reports that 32% of credit card transactions and 46% of debit card transactions were made using contactless cards in the UK in September 2019. Plus, there were 740 million contactless card transactions in the UK in September 2019, a 20.1% increase compared to September 2018.
The Review article
What are your predictions for financial services in 2020? What changes will the new decade bring about? Leave your comments below.
Seen a blog, news story or discussion online that you think might interest CISI members? Email bethan.rees@wardour.co.uk.