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05Jan

Grading our 2020 Fintech Predictions

A blessing/curse of posting to the internet is that it’s virtually impossible to destroy evidence of past statements. Not that we’re looking to hide anything- when John Best and I recorded our annual BIGCast episode offering fintech predictions for the coming year, John rightly suggested we revisit 2020’s predictions, holding ourselves to account.

There was one problem- I had conveniently neglected to listen back to our early January 2020 episode, from a time when Corona was still a beer brand and paper towels weren’t yet a holy grail. Given the unforeseen disruption we’ve all endured, how could anyone expect year-old forecasts to bear any resemblance to reality?

Here’s the kicker- our predictions turned out to be remarkably accurate, at times eerily (or comically) so. Let’s revisit our year-old comments, assessing what we got right as well as acknowledging where we veered badly off course. 

Getting a Legg Up on 2020- Our colleague and frequent guest Anne Legg proved to be the true oracle this year. Her prognostication that online spending would be way up didn’t seem that bold until she added that Walmart would make a “feisty move” into the space. She also foresaw the European Commission “digging more aggressively” into the anti-competitive behavior of tech firms. John layered onto this point, suggesting “the opening steps of a Ma Bell breakup” moment for social media. As he put it, “If net neutrality’s not OK, maybe (these companies) can just keep growing.”

On the economic front, Anne took a different road to a similar destination. Although she did not predict a downturn, she expected “the slowest growth since the great recession” and more importantly, Federal Reserve rate cuts that would leave credit unions wrestling with tight interest margins.

On a humorous note, in citing the Olympics as a popular venue for promoting new payment methods, she casually predicted that “the Tokyo Olympics will 100% happen this year.” Oops.

The Great Tech Incursion- Further in the tech realm, John saw the FAMGA players (Facebook, Amazon, Microsoft, Google and Apple) making stronger incursions into financial services, pointing to Alexa being trained for bill pay commands as a natural entry point. Fast forward, and we saw Google sign up dozens of banks and CUs of various shapes and sizes for its account partnership/integration with Google Pay- although concrete details remain blurry. And Ant Financial was on the verge of the largest IPO in history in November when the Chinese government sensed a threat to their control over the economy and pumped the brakes on Jack Ma’s brainchild.

On a more constructive front, John boldly projected that half of all loan decisions would be made using artificial intelligence by year-end (up from 10-20% by his estimation).

A Breather on the Acquisition Front- I correctly anticipated that the big fintech players (Fiserv, FIS, Global Payments) would spend the year digesting their 2019 conquests. Sure enough, most of 2020’s deal activity was on the IPO side- perhaps COVID played a role, but venture funders remained quite active. Late year news of a near-marriage between FIS and Global Payments implies this is only a temporary lull.

Two Cases of Creepy Accuracy (one funny, one not)- John sounded the alarm over a major cyber attack not involving ransomware, one that would serve as “a canary in the coal mine” moment. We almost made it through the year, but then two words: SolarWinds (maybe that’s one word…) John argued that “not enough attention is being paid to attacks on infrastructure, including banking.” Hopefully, that will change now.

Finally, perhaps the best financial advice we’ve ever dispensed on the BIGCast: “Invest in Mason jars!” It sure beat our guidance for Bitcoin, which we’ll revisit next week. We were joking about where people from both political fringes might store their money after the election. As it turns out there was a run on Mason jars (particularly the lids) as Americans took to canning as a hobby during pandemic lockdowns. But hey, we’ll accept credit wherever we can find it.

 

LINKS

The early January 2020 episode:  https://www.big-fintech.com/Media/BIGcast/ArticleID/603/2020-Outlook

Fintech predictions for the coming year: https://www.big-fintech.com/Media/BIGcast/ArticleID/671/Top-Fintech-Headlines

 

 

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