- Guy de Blonay, fund manager, Global Finance and Financial Innovation at Jupiter AM, and Antoine Hucher, equity, technology and financial innovation and financial innovation analyst at the same British manager, assess key areas where they believe investment opportunities will emerge in an exclusive report to which Business Insider Spain has had access.
- Experts say it is unclear whether there will be a before and after the coronavirus, but technological revolutions in finance are still underway, with the fastest evolution in history.
- The transition to digital payments, the advance towards telework, business resilience, will be key areas in the field of investment.
- Companies such as Apple, Alphabet, Microsoft, Tencent, Alibaba or Azure, maybe the most benefited by the growth of these trends.
The coronavirus crisis, in addition to generating turbulence in some sectors, can also accelerate the trends that already exist and create new ones. Guy de Blonay, fund manager, Global Finance and Financial Innovation at Jupiter AM, and Antoine Hucher, equity, technology and financial innovation and financial innovation analyst at the same British manager, assess the key areas where they believe investment opportunities will emerge after the next recession, in a report to which Business Insider Spain has had exclusive access.
Experts say it is unclear whether there will be a before and after of COVID-19, but technological revolutions in finance are still underway, with the fastest evolution in history. There are times of progress in this segment, so, in a certain sense, there will be a before and after the coronavirus.
The transition to digital payments continues to offer investment opportunities, Blonay and Hucher point out. It has been a key segment in investing strategies for some time. In this sense, despite the fact that payment providers will see a decrease in retail sales in the short term, they continue to be positive in the sector and argue that “the evolution towards cashless payments will leave payment providers with better long-term prospects. term”.
Telecommuting and cloud infrastructure bring together a promising theme in financial technology. Remote work is the new normal; has reached a tipping point, is socially and professionally acceptable; and experts hope it lasts. Everything digital needs the cloud to offer functionality and services. The race for cloud leadership is of colossal proportions and is dominated by large groups such as Apple, Alphabet, Microsoft, Tencent and Alibaba.
The Global Financials and Financial Innovation strategies are selectively exposed to the companies mentioned above, as they provide financial institutions with robust cloud platforms and the tools necessary to connect employees to the technology system remotely and securely.
The Covid-19 accelerates the death of cash payments
Gary Cohn, former director of the United States National Economic Council, noted that the coronavirus is accelerating the death of cash. This may be a vector for germs, and WHO has pushed electronic payments to counteract the spread of the disease. In the UK, ATM withdrawal has been cut in half since the outbreak.
E-commerce is another driver of the cash transition. With store closings, consumers shop online and latecomers to e-commerce are now going digital. Thus, in general, retail sales have accelerated recently despite the economic slowdown and this behavior “will persist as the penetration of card payments and electronic commerce remains low.“
Similarly, working from home was an exception rather than a rule. The current blockade is now causing a change in people’s behaviors. Jes Staley, CEO of Barclays in a report commented that “the idea of making 7,000 people work in the same building may be a thing of the past. ” It is likely, following this scheme, that the winners are the companies that provide tools for the flexibility of the work of employees.
Telecommuting will also change the way banks and other companies approach cybersecurity. As more employees access remote systems, technology departments will need to protect these connections.
Business resilience will become part of the corporate agenda
Regardless of the macroeconomic scenario, financial services firms must continue to invest in technology. The pandemic is actually exacerbating trends towards digitization. Satya Nadella, CEO of Microsoft, already indicated in April, after presenting the results of the first quarter, that “two years of digital transformation have been carried out in two months.“
Digital transformation in the financial services sector has been the focus of Jupiter’s Global Finance and Financial Innovation funds for several years and will continue to be “for some time,” the managers say. However, they are aware that a change could be seen in the way banks approach digital. Until now, it has been finding new ways to interact with customers in branches and online. The pandemic has now disrupted operations worldwide with many bank employees unable to go to the office.
In this context, business resilience, Blonay and Hucher highlight, is emerging “as a new item on the CEO’s agenda with a growing interest in automation solutions that are used to replace human work in handling tasks such as processing. of insurance claims and response to customer calls. ”
A focus on resilience can also accelerate the transition from technology systems to third-party cloud platforms. Cloud providers like Azure and Amazon have shown that “they could ensure continuity of service to customers when the latter had to send their technology staff home,” experts say. In this way, the cloud is also a facilitator for teleworking and a cost-saving engine, two priorities for financial services technology departments.
Positioning portfolios for a post-COVID world
Jupiter AM’s underweight exposure to traditional banks has kept investment funds Jupiter Global Financials and Financial Innovation safe from the recent deluge of dividend cancellations and suspensions.
As volatility in financial markets may persist somewhat longer, managers themselves like global exchanges that benefit from increased market volatility and position themselves on the growing demand for data.
The payments subsector continues to be important with e-commerce proving to be relatively resilient in times of stress and capitalizing on the change in consumer and merchant behavior.
Finally, the teleworking from home and business resilience subtopic is creating an increase in demand for employee collaboration software and cloud platforms. Solutions that manage employee identification so they can connect to technology systems from any device and location are also in high demand.