Increased online shopping, increased mobile payments, and rapid adoption of these trends across virtually all population groups have marked the evolution of the financial sector in recent months. New regulatory initiatives, deglobalization and digitization are some of the trends envisaged in the financial sector by 2021. As the world recovers from COVID-19, it is adjusting its commercial focus somewhat, and Jose Duarte, an entrepreneur and eCommerce expert from Costa Rica, discusses financial trends that are going to shape the new year.
Forecasts for 2020 did not count on the world being affected by a pandemic we are still fighting. This scenario has left behind a difficult period for most sectors, but it has also opened up new business opportunities. In the financial field, as in other sectors, digitization has accelerated and new technologies have been implemented at a faster than expected rate. One of the most obvious for the customer has been the taking of measures to avoid personal contact as much as possible. To this end, within days of declaring the pandemic, the World Health Organization (WHO) recommended reducing the use of cash. The financial industry’s response was to work to increase the limit of contactless payments.
The increase in online purchases, the possibility of making mobile payments in almost any establishment and the rapid adoption of these measures in virtually all population groups have marked the evolution of the financial sector in recent months. Although forecasting is difficult this year, consultancy PwC points out in its report on the future of the sector that seven financial macrotendencies by 2021 will impact the post-COVID-19 world.
The first is low interest rates. Explains Duarte, “The scenario will continue to deteriorate margins and business models as businesses cope with financial strain. In order for lending institutions to survive, they are going to be forced to change their interest rates to counter the impact of COVID-19.”
Regulated sectors are going to see changes, as well, as the recession caused by the pandemic and asset deterioration will reduce the ability to support the real economy as we face the exit from the crisis. In addition, alternative sources of capital will become increasingly important in the financial sector. COVID-19 will not delay but, rather, accelerate the implementation of regulatory control in different countries and geographical areas.
The process of deglobalization is another strong possibility. The world economy is alive, but limited cross-border operations will make entities more focused on their home markets,” asserts Duarte. “Their growth is increasingly linked to the evolution of the economy in those countries.” In addition, business digitization entities face relentless pressure to increase their productivity through digitization and upskilling of their employees.
A new wave of disruption caused by customers towards a financial sector based on platforms and ecosystems will generate a wave of disruption and disintermediation. To address these challenges and trends, the implementation of financial management software allows companies to adapt to changes and cover all phases of the accounting process in a fully automated manner. “It is not only possible to keep track of expenses and billing, but it is also possible to carry out a control of the budget and reduce the risks before possible deviations or unforeseen market events,” adds Duarte. Something that, after what has been experienced in recent months, is of vital importance to ensure the success and operational continuity of organizations.
It is important to start and maintain sound accounting throughout 2021. This will help us improve financial decision-making and gives us an overview of how the company is doing. On the side of physical or natural taxpayers, maintaining a good accounting allows them to face better some requirement on the part of this in some action to control the tax administration of the business.