These digital investment trends are being accelerated by the corona pandemic

Pandemic as a trend accelerator

What began as an unwanted stress test could become an accelerator for numerous technological, social, economic and ecological trends: The pandemic marks a hard turning point for the economy and society, but has also set in motion many levers that previously seemed immobile.

For example, companies and institutions have been working for years on the necessary technical infrastructure to drive forward the digitization of processes or business models. According to one Study by Bitkom Research (2019) The majority of German companies surveyed saw themselves as laggards in digitization last year: Just one in three companies (33 percent) had a central company-wide digital strategy. And only one in five companies (22 percent) wanted to invest specifically in the development of new digital business models in 2019. In the This year's study 71 percent of respondents admitted that they were laggards — compared with 60 percent in April and 55 percent just a year ago. Due to the need for action raised by the pandemic, 43 percent of companies say that their investments in digitization have “increased significantly” (11 percent) or “rather increased” (32 percent) since Corona.

Digital transformation offers new business solutions

In addition to technological changes, the corona pandemic has also promoted a rethink in terms of sustainability and climate protection. In urban areas, for example, bicycles are gaining acceptance as a means of transportation. The automotive industry is increasingly investing in e-mobility solutions, because the car is not only still an important means of transportation in this country, but is also still an export hit. During the crisis, German manufacturers were able to benefit from their premium positioning and, according to a Deloitte study, increase their market share by increase more than 2 percentage points to over 25%. In order to use the restart of economic activities for sustainable transformation, the Federal Government is supporting “Corona response package” Emergency aid measures for biodiversity and the expansion of a green economy.

The pandemic has also forced people to radically change course in their private lives. Whether it's virtual conferences in the home office, homeschooling via e-learning tools or chats with family and friends: In the living environment of the future, video conferences, e-learning and digital work will become increasingly self-evident. This also applies to sales channels. Instead of physical visits to department stores, travel agencies or bank branches, customers are increasingly choosing the more convenient and faster option via online platforms.

This is also the case with digital payment and investment options. The acceptance and regular use of online and mobile banking has been accelerated by the corona pandemic, cashless (in particular contactless) payments have become more important and private investors are more open to alternative investments. For the Respondents to a recent study It is also very important to be able to process as much as possible online when investing money — while the need for personal advice declined.

Corona balance sheet: willingness to invest falls, savings assets rise

Saving and investment patterns have also changed since the outbreak of the pandemic:

Private households spend less money on consumption and save significantly more of their disposable income. However, the pandemic is widening the gap between higher and low-income earners.

While high-income earners save, low-income earners barely manage to set money aside during the crisis. Many also shy away from the risk associated with investments — and thus miss out on the opportunity for capital market returns. A new study by DZ BANK Research World Savings Day 2020 shows that although the savings rate in the second quarter of 2020 was historically high at over 20 percent, the share of uninvested financial resources in Germany has continued to increase — to 28.2 percent of private financial assets.

Much of the money saved is therefore likely to remain in savings, overnight money or current accounts and allow these deposits to continue to grow in the amount of 2.4 trillion euros (2019). Gigantic sums that destroy capital in the long term due to low, zero or penalty interest rates. With the outbreak of the corona crisis, the investment problem is therefore doubly worsening: More is being saved, but at the same time, a rise in interest rates due to the expansive monetary policy of central banks is becoming even further away.

Think long term, invest in digital securities

As a result of financial repression, tangible assets such as stocks or real estate became more important even in the crisis year 2020. An increasing number of private and institutional investors are using tangible assets as inflation protection. According to a recent study As a result, the proportion of share and fund owners in Germany rose by five percentage points to 34 percent in 2020. In 2017, the ratio was just 24 percent. Not only are equities very popular, particularly among younger target groups — trust in digital securities has also increased. And rightly so, because the financial sector is being permanently changed by the ability to represent tokenized securities and digital assets in the blockchain.

Digital shares such as investment tokens offer (small) investors several conveniences: the possibility of flexible, diversified wealth creation, cost efficiency and security through blockchain technology.

While a multi-asset strategy consisting of stocks, real estate, art and other alternative investments for diversified wealth creation was primarily reserved for large investors in the past, private investors today have the same options: With just a few hundred euros of start-up capital, investors can invest in a “basket” of tangible assets such as real estate or art via investment platforms. If the corona crisis has taught providers of financial services one thing, it is certainly the recognition that personalized investment options The future belongs to customers who allow them to structure their wealth individually and independently.