2021 Predictions

  1. Vaccine Roll-Out
    • End of lock-down by May: in the UK  – 2m jabs weekly, meaning large immunisation by April, with some slippage so potentially by May we should be out of the lock-down.
    • We will not be “back to normal” until 2021, as we will not know whether or not the virus returns every year in a mutated form. Is this virus perennial like flu or it is wiped out and gone?
    • Other countries will take longer to vaccine, esp Europe but should be all done by June
  2. The Economy
    1. Democrats take Georgia, meaning they have control of the senate and can push through tax rise
    2. Household balance sheets are strong due to forced savings in 2020
    3. More broadly speaking: it is exciting to see the growth of electric cars, the reduction of battery prices, and the reduction of costs in wind and solar energy. There are lots of other exciting areas : biotech, space, transport, chips.
  3. Asset Prices (“A bull market is like sex. It feels best just before it ends.”)
    1. Quantitative easing continues, feeding through to continued asset price inflation but balanced by increased taxation (potentially wealth and capital gains taxes) to repay stressed government balance sheets
  4. Money-Laundering
    1. Americas 
      1. US Anti-Money Laundering Act of 2020 has passed meaning Fincen have to collect UBO data, increasing the burden on SME’s but reducing the burden on large institutions
      2. NPRM on unhosted crypto wallet KYC obligations – legislation is rejected
    2. Europe
      1. UK Autonomous sanctions regime is live
    3. APAC
      1. MAS continues to call for more innovation but no big changes
      2. China regulates more Fintech entities like ANT
  5. Fintech
    1. Fintechs continue to grow and become profitable in their own right, taking share from incumbent institutions
    2. Venture 
    1. Continued heat in early-stage investing and late-stage rounds due to quantitative easing. Lots of failures and undeperformance, but “the most significant is that it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”
  6. Brexit and UK
    1. Shift back to collaborative, less jingostic stance towards Europe
    2. Slow tactical loss of some financial services but more to Singapore and New York than Paris
  7. Post-Pandemic Behaviour
    1. Some WFH behaviours persist, others revert. Data shows workers do not want to go back to the office 5 days a week, but perhaps 2 days a week. Companies who can recruit and manage remote teams will be at an advantage in terms of talent pools and office costs and therefore will succeed more vs companies that operate a full office model.
  1. We will no longer have to talk about Brexit. Banks will have their subsidiaries set up the EU and their license in the UK. Actually, we will realise that it was never such a big thing after all. Those who have to do state by state expansion in the US and go through the pains of launching in California, New York and Texas separately will realise that the loss of passporting, whilst an annoyance, was never the terminal death sentence for the City or for UK fintech that was initially feared.

  2. Neobanks have to choose their niche – for all the talk of consolidation and rebundling, we will realise that neobanks and start-ups will have to choose a defined customer set and cater to them. It is not possible to build the very best trading platform, the very best pensions service and expand globally simultaneously – fintechs will be forced to choose what they are good at and what they want to focus on

  3. Open Banking will move from the infrastructure layer to the application layer – we had a wave of infrastructure building out integrations – companies like Yapily, Credit Kudos and Truelayer – but now will come a wave of value-added service providers like Vyne and BillX who again choose niches and customer sets rather than being back-end providers.

  4. Digital Banks will begin to care about adverse media – a neobank will be fined for a money-laundering breach and be exposed as having too lax an attitude to either terrorist-financing, sex trafficking or money muling. With this and advances in the underlying technology, regulators will begin to question whether it’s enough to simply look at the limited set of high-risk entities covered by sanctions and political exposure, and begin to look at mandating broad-based adverse media checks.

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