Financial technology in 2021 – Scrutton Bland predict what will be big this year. 

15 January 2021 - Elizabeth O'Hanlon

A year ago Ryan Pearcy and Simon Pinion tried to predict what would be big for digital technology in 2020. With some successes and failures they have decided to attempt to improve on this with their predictions for 2021.  

But first let’s see how their predictions stacked up: 

An acceleration in small businesses adopting cloud technology  

Verdict? Correct

2020 has been a big year for cloud adoption. Not that it was predicted, but the COVID-19 pandemic and the requirement to work more flexibly drove businesses to pivot quickly and adopt cloud technology. Video conferencing has become commonplace and collaborative working on Microsoft365 or Googlesuite tools has become the norm. I think we can safely say that the speed of adoption has surpassed even the most optimistic predictions. 

Receipt capture upon payment

Verdict? Mixed

This area struggled to get off the ground in 2020. Flux hasn’t expanded beyond its three-bank stack (although Barclays was confirmed) and there were no new direct competitors in the marketplace. This could have been caused by the ultimate delays to Making Tax Digital resulting from COVID-19, or just that businesses had other things to concentrate on. All that being said, receipt capture operation has expanded and system such as Pleo (a tool that prompts for receipt capture on payment) have seen significant investment and development over the past year. 

The benefits of open banking

Verdict? Fail 

We have seen finance systems use payment solutions, such as Pay with Transferwise by Xero, but this didn’t really use Open Banking and issues on setup and roll-out have reduced uptake. Other deployments of open banking have been limited to date due to restrictions by the banks. 

Application Programming Interface (API) link reduction and general APIstandards

Verdict? Fail 

There have been no notable restrictions in API connections even with some software being bought out. There appears to have been no progress on an API standardisation either. 

Finally, foldable screens!

Verdict? Correct  

Foldable phones came to the forefront in 2020 with many new releases and upgrades. That said, they are still not mainstream as the technology is still developing and so current solutions aren’t great, but they are also not that revolutionary. 

Virtual Reality becomes practical

Verdict? Fail  

Virtual Reality is one area that has been hit hard by the pandemic. Seen as a nice-to-have rather than a must, most users have been put off from the investment. We see a place for VR in the future, but 2020 was not the big year it was predicted to be. 

Overall with three fails and only two correct we think we can say these predictions were mixed at best. The pandemic had both positive and negative impacts but what we can conclude is that it has forced change within global business operations and that change will impact decisions in the future. 

So what do Simon and Ryan think is likely to occur in 2021? And will they be more successful in their predictions this time?

The rise and rise of AI 

Automation, rather than AI, is on the march, although you might not be aware of that. Good automation happens in the background so that you as the end user aren’t aware of what is being automated. We are already exposed to automation every time we carry out a Google search or buy goods on Amazon. True AI though does not just process algorithms, it learns from your actions or the data it is processing and so is far harder to create. Natural language programming really accelerates automation, and in the accountancy world we expect AI to use natural language to interrogate businesses data to improve accuracy of records and to flag items for review and for tax compliance as well as providing better business intelligence. The drive towards digital business records over the past few years has created a wealth of information for AI to draw from and we expect inroads to be made in this field over the coming year. 

The internet of things 

The cloud journey accelerates as 5G becomes more widespread. With increased coverage, 5G will open up the possibilities of what can be achieved with the internet of things. Your phone may use your location to predict you are heading home and automatically switches on the house’s heating and lights. It may even unlock your door as you approach. Your oven can detect what food is inside and automatically adjusts the temperature and cooking time and monitors the cooking to notify you when it’s cooked. 5G opens up the internet, allowing more devices to connect and to talk to each other. In the business world this can automate elements of the supply chain and stock management as well as providing insights and automated customer care. It may be too early for the examples we provide above, but with 5G expansion increasing over the coming year we believe that the adoption of 5G enabled technology will continue to increase. 

Electric vehicles 

We expect 2021 to see an acceleration in the adoption of electric vehicles. The Government has brought forward the date for the ban of the internal combustion engine for new car sales to 2030. Many manufacturers are already ahead of this with companies such as Volvo aspiring to have 50% of all new sales as fully electric models. Range and charging infrastructure remain the biggest challenge to wider usage and as a result we expect to see adoption of new battery technology as well as some smart charging options. Expect to see wireless charging for vehicles whether at home, in a public car park or even as you are driving. In the business world over the next few years we will see wider adoption of companies replacing their van fleets with fully electric vehicles. Finance companies will encourage businesses to adopt greener strategies, and we see that the company vehicle fleet as being one of the key areas of change. 

Augmented reality 

We talked last year about VR technologies becoming more widely adopted. We haven't seen that yet, but we do expect there still to be growth in Augmented Reality (AR). Certainly forecasters are predicting growth in the AR entertainment arena. LIDAR (digital distance measuring) capabilities of smart phones will allow wider adoption in the business world and everyday use for the VR technology. We have seen one company this year developing the next Zoom alternative with a solution that uses AR to interact in meetings rather than the video call. 

General API standards 

API (Applications Programming Interface) and connections were mentioned last year albeit with our prediction being a bit premature. As we expect the growth of API usage to continue to accelerate in 2021, there is an increasing requirement for formalised standards to improve consistency and reliability that will make APIs more readily available and to encourage wider adoption. We are therefore pinning our hat on this getting more traction in 2021 with a drive towards setting standards towards the end of the year. What we expect to be different is that API connections will become wider and not just focused around operational software, but will include physical connections to machinery.  

Digital Farming 

One industry that may make more progress than others in the coming year is the agriculture sector. Certainly wider adoption of 5G and APIs can provide greater capabilities in the use of new technologies. We expect livestock technology to become more connected and 5G helps  make that possible. In the UK in particular, farms will need to adopt new technology to help improve yields and to track cash flow and profitability in a period where Government subsidies are reducing. 

In history we have seen various world events, such as wars, accelerating the development of technology the COVID-19 pandemic being an example of this. With greater adoption of AI, 5G and the internet of things, it certainly feels like we are on the verge of a new revolutionary age, and in time we will talk about the impact that the current technological revolution has had on our lives and businesses in much the same way we looked back at the Industrial Revolution. 

With so much changing in the digital landscape it is imperative to talk to independent professional advisers in this field. At Scrutton Bland we value the importance of financial technology solutions and have created our System Advisory Service to ensure our business clients can stay ahead in this field. 

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