The world faced profound challenges during 2020’s roller coaster ride. According to Yieldstreet, Fintech’s emphasis on digital infrastructure left it well-positioned for a stay-at-home world. A vaccine is a good sign we’ll return to normal, but the pandemic has accelerated a few trends that were already underway in finance and banking. Those trends should continue this year.
Modern Investing Portfolio: The world’s top institutional and ultra-high-net-worth investors utilize alternatives, which have previously only been available to them. It is time for retail investors, whether an accredited investor or not, to rethink their 60/40 portfolio and modernize it. Yieldstreet believes access to investments beyond stocks and bonds will become increasingly important in 2021. Low interest rates and expensive stock valuations make the path forward more challenging. Alternative investments beyond REITs are going mainstream. Companies like Yieldstreet should continue to accelerate alternatives adoption as investors seek new ways to diversify.
Digital Currency and Blockchain: Their importance will only increase. A global, years-long trend toward mistrust in social institutions — in economic policy, political contests, and especially public health amid the pandemic — should provide a tailwind for digital currencies because, in many ways, they exist outside these institutions. The digital infrastructure built around blockchain technology will likely become increasingly critical as economies and supply chains reconfigure following last year’s recession.
Open Banking Adoption: Fintech has supported the digitization of the finance and banking experience, making socially distant transactions easier. Challenger banks or neobanks such as Chime, Revoult and Moneylion are expected to continue to benefit from a decreased emphasis on brick-and-mortar, in-person banking. COVID has revealed to many consumers that face-to-face isn’t the most critical aspect when it comes to managing a pocketbook or generating passive income.
Advice Will Also Go Digital. Information flow has expanded tremendously in the consumer space and this trend will likely spill over to the saving and investing space as well. Consumers can now access investment advice digitally but the key difference may be the adoption of even non-traditional sources from finance sites and blogs. It’s likely that investment firms also look to heighten their influence in the digital advice game by offering allocation and investment analysis advice.
Self-Driving Money: Yieldstreet’s “hot take” about the future centers on a potential pivot point within the financial industry: Technology is increasingly facilitating “self-driving money” and futuristic wallets. Meanwhile, the financial industry is still dominated by one-on-one, personal relationships — “handshakes” are still in many ways the coin of the realm. Think about how self-driving cars could upend the auto and transportation industry. In finance, software may similarly reduce barriers and frictions for investors. A lot of companies are going to have to reckon with a new reality where relatively inexpensive apps and technology start to take the place of traditional banking, advice, and asset allocation.