COVID-19 is putting the global economy into a tailspin. Many countries are heading for very sudden and unprecedented recession. This crisis will catalyze some huge changes. Few industries will avoid being either reformed, restructured or removed. Agility, scalability and automation will be the watchwords for this new era of business, and those that have these capabilities now will be the winners.
Thanks to government stimulus packages, liquidity is coming back to the market. It will keep enough of the economy afloat so that it can climb out of recession rapidly once the various lockdowns are lifted. But the way much of it is structured means that it will likely benefit already better capitalized larger businesses, over the smaller operators who may struggle.
It would be an over-simplification, however, to paint this new era as one of “big” versus “small”, or “incumbents” versus “upstarts”. The past decade’s tropes that pitted fintechs and digital natives against big banks and consumer brands will seem dated by the middle of this year.
Indeed, one could see the current times as the first real test of the digital-first business mantras that have been extolled over the first part of this century. COVID-19 will force a rebirth of many industries as we all sit at home in lockdown, re-assessing and re-imagining modes of consumption, supply, interaction and productivity. As president of a global technology firm, what intrigues me is where there will be paradigm shifts, as opposed to just existing trends either accelerating or decelerating.
For instance, the shift from cash to digital payments is clearly accelerating. My WEF Council colleague Huw Van Steenis, who is chair of the sustainable finance committee at UBS, highlighted that 31 countries have lifted contactless payment limits this year to support social distancing measures. In the UK, ATM usage was already falling between 6% and 14% a year, but has now plummeted by more than half. As he argued in his “Future of Finance” report, this has major implications for: the resilience of payment forms – young and old; for banks’ business models; and society, as we work to ensure no-one is left behind in an increasingly digital economy.
In the workplace we’re already seeing a super-charging of the nascent bring your own device (BYOD) trend in business technology. As people scramble to work and socialize remotely, previously niche tools such as Zoom, Slack, Microsoft’s Teams, and even the Houseparty app, are suddenly supporting millions of personal and corporate interactions every minute.