2021: A year of innovation and convergence

Every year around this time prediction articles get published, each sharing a vision of what the year to come has in store for us. The majority of articles make predictions that are all but unavoidable. For example, I think we all know that ecommerce will have another great year in 2021, or that working from home will continue and collaboration software will thrive. The question is, how will these things manifest?

In writing a prediction piece of my own I obviously also touch on these dominant themes, but my objective is to make some more specific forecasts. Ideally, I will be correct with some of these, but hopefully not more than 50% as being right on more than that would mean my predictions were too safe. 

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PREDICTION 1: Where people used to go shopping for entertainment, their entertainment will become one of the ways they shop

Pre-pandemic, malls were good for two things, shopping and as a place to hang out. For many shopping was a fun activity. It was something to do with friends even if they didn’t intend on buying very much.

Post-pandemic (or rather mid-pandemic), malls in many parts of the world are empty. Even in markets where malls may still be open or even busy, like APAC, they are changed. Ecommerce has gained ground on physical shopping, and the mall as a destination to just "hang-out" is gone. And yet, shopping and entertainment have always been connected, and will likely remain so. 

In 2021, we will see Amazon Prime and / or Netflix combine streaming entertainment with shopping. There will be programs where you can buy what you see on the screen. The outfits, the furniture, the gadgets, it won’t just be product placement, it will be store display.

PREDICTION 2: The physical and virtual world will further intersect with brands offering digital add-ons to real-world purchase(s) and vice-versa

People are spending more money on Virtual Goods every year. You just have to look at games like Fortnite who don’t charge people to download and play the game but have still seen over $1.2B USD in player spending since March 2018.

It’s a huge market and it’s growing fast, so more brands will be looking for ways that they can participate and share in the proceeds.

Expect to see lifestyle brands lead the charge by partnering with gaming companies to enable physical/digital cross-over purchases. Buy a new pair of shoes in the game, get the real pair delivered to your home. Buy a new pair of shoes for yourself in the real world, unlock virtual assets in the game. And where lifestyle brands lead, expect luxury brands to be quick to follow.

PREDICTION 3: Physical stores as showcases to display products, enable experience, and fuel ecommerce will see rapid growth in the second half of 2021

Being honest with myself, I am not sure about the timing on this one. I believe we will see a resurgence of physical retail, but until we reach a turning point in the COVID-19 pandemic, the total investment into this space may be limited.

But in those parts of the world that are worst affected by COVID, we should still expect physical retail to come back. It will just be different when it does.

The trend towards ecommerce will continue. Challenges with supply-chain and delivery are being resolved quickly. And the desire for large and expensive retails spaces will be limited. The new trend will be the retail showroom. There will be no products available to take home, only display units to test and experience as incentives to purchase. Mobile ecommerce stores will gain location awareness so that the digital and physical stores interact in ways that make help to close the gap between inspiration and online purchase.

Expect to see those brands that traditionally required a physical footprint or the brands who build “flagship stores” to pioneer the concepts, with digital pure-plays also venturing into physical retail in this way. 

PREDICTION 4: A FinTech Brand will buy a globally recognized / household name bank brand

This one may be a bit of a long shot as traditional banks come with legacy technology infrastructure and traditional cost models that don’t naturally fit the FinTech business and cost model.

That said, with FinTech's share valuations exploding, they will want to put their newly gained equity to good use. And with legacy banks having worked hard to cut costs in 2020 as a response to COVID, their significant distribution networks might well now become appealing for the right brand.

Given that their distribution networks would likely be the asset that is most desirable, I wouldnt be surprised to see an InsureTech brand buy a global bank in an effort to rapidly scale their footprint and distribution

PREDICTION 5: Banking-as-a-Service will be the window that brings Big Tech into day-to-day banking

Goldman Sachs recently announced the launch of a new Banking-as-a-Service offering as a way to further their foray into retail. Stripe is now offering Banking-as-a-Service products that can be integrated into their clients' offerings. And, Citi and Google recently announced a new partnership to offer a combined savings and checking account called PLEX as part of the Google Wallet.

On the whole, Banking-as-a-Service is shaping up to be a fast-growth category within Fintech, and who is better positioned than the cloud players like Amazon, Microsoft, and Google to manage the infrastructure required to deploy this at scale. While it’s unclear how this will take shape, there will likely be many announcements this year that position these brands more squarely within the backbone of banking.

PREDICTION 6: Brands will look to Subscription Models as ways to both improve their service and increase customer loyalty

Early in 2020, the US company Panera Bread launched a $9 a month unlimited coffee subscription. The results have been positive in that subscribers came more often and bought more items in store.

With a COVID vaccine being distributed, but retail climates remaining far from certain, brands will likely be more willing to embrace business models that promise recurring revenue, and/or greater visibility of revenues. More to the point, with foot traffic still low in many parts of the world, loyalty and share of wallet will be fundamental to many brands growth strategies and subscription is likely to sit at the core of this strategy for many brands.

PREDICTION 7: There will be a surge in mental health apps that go way beyond what is currently available by-products like Headspace

Mental health has always been a difficult subject and business as people have preferred to hide from the realities of the subject. 

But now, even in markets like China, where mental illness was once perceived as a sign of weakness and not discussed, we are starting to see not only acceptance of the subject, but growth in supporting people through digital apps.

Following a year where many people around the world have been isolated, and where (in some countries) we are seeing increased rates of domestic abuse and suicidal thoughts, digital therapy is likely to rapidly scale as it offers the potential to connect the people in need with people who can really help in an always-on manner made possible in combination by AI and support professionals.

PREDICTION 8: Digital Therapies will be normalised as part of a prescribed health regime

With COVID still present, but the future in focus, the health landscape will be ripe for innovation and a very interesting space to watch. Not sure how far we will really get in 2021, but what’s clear is that people are increasingly looking beyond the traditional pay-per-use model for healthcare. Value and outcome will be the key focus as people take a more active role in their personal healthcare.

In getting to better outcomes, digital therapies and care will become commonplace as part-and-parcel of a complete health regime. These will start to focus increasingly on prevention rather than cure. To make this happy, brands will look to AI and personal data signals to drive recommendations supporting behaviour change and helping drive improvements in treatment adherance.

PREDICTION 9: Countries will create new tax laws and incentives designed to attract highly paid tech workers who are allowed to work from “anywhere”

 I am cheating a little bit on this one because Dubai has technically already done it. But they have a 0% tax rate already, so to my understanding, what they have is to allow people a one-year VISA without requiring local employment if they can prove they have an outside income. The interesting part will be when countries who do have income tax go after this nomadic workforce… and they will.

Expect to see desirable destination countries create new VISA types designed to attract the digital nomads who are able to work internationally. These VISAs will likely be designed to drive fiscal benefit for the local communities through minimum monthly deposits into local banks, or even nominal income tax on foreign revenue (depending on where they are from, this would still likely result in the nomad paying reduced tax rates).

PREDICTION 10: Sports viewership will quickly return as augmented reality reconnects viewers with sports in ways that are more engaging than ever before - even if people cannot attend in person.

2020 was probably the worst year for professional sports since World War II. And it’s far from certain that 2021 will be any better. But people love sports. They love watching, cheering, being part of the tribe.

Now, with in-person viewing limited, sports leagues will launch a wave of AR innovations designed to bring people closer to the action and the crowd. For years now we’ve seen data displayed and digital overlays and replays on-screen to help people better understand the game. This year, we will see AR take a new form, moving beyond visualizing the data with golf swing speeds, and distance traveled, and start using AR to bring people into the action. Watch a football match played live on your table, and see the other people watching at the same time as if they were in the crowd, see player interviews up close, etc.

PREDICTION 11: Programmatic audio ads for Podcasts will see appear and see explosive demand as Voice Tech / AI simulates host voices for any and every ad

In addition to AR, 2021 will be the year that Podcast monetization matures and goes programmatic. Following the big-budget purchases of Podcasts like Joe Rogan, Spotify and other audio platforms will be launching new ad products for Audio.

The most notable is likely to be programmatic ads within Podcasts. The barrier to launching programmatic Podcast ads so far has been the fact that they are often voiced by the podcast hosts. This limits the number of ads that it is possible to make, and while it works for broad sponsorship, it does not capitalize on the global scale that many podcasts now enjoy. 

With deep fake voices now possible, expect Podcasts to train algorithms with their hosts' voices and sell the personal delivery of an ad message using Programmatic placements. 

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After a transformative 2020, it would be easy to continue making more and more predictions about what comes next and the second-order effects of COVID. But for now, we’ll stick to these 11.

That said, what I am most excited to see are the innovations that can’t be predicted. The innovation that tends to follow economic downturns. Remember that after the 1918 Spanish Flu pandemic we had the roaring 20’s – a period rich with industrial innovation.