2021 Predictions

As we are about to get into the festive season during such unusual times, the same rituals as every year apply: New Years Resolutions and Predictions. I'll stick to the latter and let the crystal ball shine some light on my predictions for 2021:

• The impact of Covid-19 will continue to put a strain on everyone's and everyday's life.

Not a difficult one to predict, since we only start understanding how vaccines work and rolling them out to the most vulnerable first. however covid-19 will at the same time create burden and challenges but will also create a number of opportunities in the next year.

Cashless Society

I, for myself, have not used cash in 2020 at all. since the beginning of covid-19 and even before, cashless payment services like Paywave, Payhlah and many others including their value added services (ie.: cash back, loyalty points, etc.) have proven to guide the way into a cashless future and society. while there is still geographies where cash is required due to infrastructure limitations, as well as other considerations (right to pay cash initiative in Austria) we will continue moving ahead with big steps achieving this milestone rather sooner than later.

Increasing Cost Pressure!

The global crisis and in general cost saving pressure in financial service institution just acknowledge some selected statistics that can be found anywhere on a google search:

• The public cloud service market is expected to reach $623.3 billion by 2023 worldwide.
• 83% of enterprise workloads will be in the cloud by 2020.
• 94% of enterprises already use a cloud service.
• 30% of all IT budgets are allocated to cloud computing.

Other than continuing years of growth ahead for the public cloud service providers such as AWS and GCP it only means that legacy infrastructure and outdated software solutions that do not offer cloud native capabilities will create a financial burden in the balance sheets. Banks that have not started now to look into modernising their Infrastructure and significant workloads risk of falling behind and loosing market share. That said, while adoption of Cloud has steadily increased in the past years, it will become the new norm in the years to follow.

Market Consolidation

After announcing that Xinja will be closing their services and returning both Deposits and Banking license, will this be a wake-up call for the growing number of Fintech's offering financial services to customers or is it just the first one provoking a chain reaction causing the market to consolidate? Nice looking mobile apps, with basic financial services and their only differentiating capability being offering a higher interest rate than competitors has created a bunch of non-profitable but high valued organisations globally that compete in this market. As covid-19 will continue to rage across the globe and the population will possible look for more conservative options to deposit money into, it will create an open market in 2021 for mergers and acquisition. And since large incumbent Financial Institutions finally start catching up, with having a better understanding on user experiences and learning from Fintech's and hyper specialised service providers they now are able to offer advanced services with superior user experience and market leading capabilities that truly differ in the market (ie.: Mox by Standard Chartered), pressure will only continue to increase on VC's, Funds and others who finally will want to see some returns on their investments.

Buy Now Pay Never?

For the last year(s), Buy Now Pay Later was the thing everyone was trying to get into. The growing sector, led by Klarna and their millions of users have paved the way for a multitude of services from new Fintechs, dubious sites and even established banks (mostly through partnerships), is widely seen as disrupting the credit industry, with pay later services allowing shoppers to buy and receive goods straight away while paying off the full price in instalments. However that innovation has also caused a growing fear amongst regulators and consumer advocates that these practises result in uncontrollable debt, mostly amongst our younger population. This will cause the regulators globally to re-think their approach for responsible lending practises and impose stricter restrictions on these players.