As COVID-19 forces companies, investors and policymakers to redefine a new normal for a second straight year, it’s creating insights and opportunities out of crisis and disruption. The past year surfaced new business models that suggest how adaptability and flexibility can underpin the way forward on multiple fronts. What’s new and powerful is the benefit of more than 12 months of data and qualitative learning on how two seemingly diametrically opposed forces — resilience and agility — can work together.
This study from Arizent — parent company of American Banker, The Bond Buyer, Digital Insurance, Financial Planning and National Mortgage News — explores what financial companies see coming in 2022 from the economy, regulation, technology, innovation, competitors and consumer behavior.
Key findings include:
● Optimism about whether the pandemic economy will recover next year or wait until 2023 varies by industry. Financial advisors are the most sanguine about timing, with more than half predicting a full pick up before the end of Q2 2022. Six in ten insurers and mortgage companies see a back-to-normal by July 2022 or later. But only one-third of all banks predict a full recovery in the second half of next year. Nearly half, or 44%, see recovery only in 2023.
● Concerns about rising inflation are significant across all financial industries. Roughly one in two companies is either worried or very worried about the impact of rising prices on their customers. These surveys were conducted in early October, when the most recent annual rate was 5.4%. Since then, consumer prices spiked to 6.2% in October, the largest increase in three decades.
● Deal making is predicted to thrive. One in four financial institutions expects to buy or be acquired by a competitor next year, as the pandemic fuels consolidation with smaller players and rivals. Regional banks are the most likely to do a deal in 2022.
● Corporate America’s scattershot approach to using digital technology to transform strategy, operations, products and services is incorporating a human (esque) component. Eight in ten financial advisors say they’re in the process of incorporating AI technology into their practices. Insurers say they’re blending digital approaches with more interfacing with people. More than eight in ten banks and nearly as many mortgage companies expect their tech spending next year to increase moderately or significantly.
● Everybody is worried about competition from Big Tech, as Amazon, Google and other giants increasingly muscle into payments, lending, banking and insurance.
● Environmental, social and governance (ESG) issues, both for investors and financial companies, occupy increasing mindshare.