There have been a sizable number of great prediction lists covering the upcoming year. As such, we decided to avoid the 2018 talk. Instead, I put a quarter into the magical coin operated binocular viewer near our office and set the dial to 2028. The images were blurry, but many of them looked really cool anyway.
1. Amazon leads Big Tech in financial services.
In 2018, a few Big Techs partner with financial institutions to offer deposit, lending and payments services. Such an approach works reasonably well over the next few years, as it allays some concerns that the tech giants would dominate financial services in the digital world. By 2028, though, the biggest of the Big Techs, Amazon, starts to feel the heat in earnest over its growing economic dominance. And in the wake of Amazon’s UPS acquisition and subsequent integration with AmazonUber, the “Bust-up Amazon” movement gains momentum, much to the chagrin of Amazon’s Prime Bank and small business banking customers. These financial services customers have come to assume that their frictionless voice UX, juicy rewards and extremely tight pricing are rights, even though all of these activities are losing money for the Seattle-Atlanta-based giant.
2. “Peak Partnership” hits.
After 2020, financial services firms begin to deemphasize partnerships with fintechs and either seek to buy start-ups outright or build solutions in-house. That latter approach is fueled by the rising ranks of tech talent who choose to work in financial services. That trend accelerates in the early 2020s, after several major banks replace their CEOs with technology and data science professionals capable of overseeing their newly deployed blockchain and AI-centric strategies. These male and female leaders are less interested in external partners and more interested in industry-wide, open-source projects and using Agile methodologies across business functions. Ironically, as the firms become more “techy,” their CEOs go out of their way on quarterly conference calls to insist that they are financial services firms, not tech companies.
3. Fintechs and insurtechs hang out at the mall.
Virtual reality emporiums, DNA testing kiosks, art exhibits, restaurants with child care, beer and wine tastings, dating cafés, indoor running tracks, meditation centers and amusement rides fill thriving malls, several of which have been designed by the world’s leading architectural firms. The experiences to be enjoyed at the mall are paid for increasingly via a finger that is inserted into a POS fingerprint scanner. This biometric development gives fresh meaning to the phrase “give someone the finger.” Also at the mall, pop-up shops, rather than permanent locations, represent a majority of the retail footprint, with everyone from digital banks to app-based investment advisors and insurers seeking flexible opportunities for physical engagement.
4. “Velvet Layoffs” and CPA rock stars reign in the “LLC economy.”
Thanks to broader business and economic trends that were accelerated by 2017’s Tax Cuts and Jobs Act, the “Gig Economy” is replaced by the “LLC Economy,” in which an increasing number of freelancers and corporate executives recognize their income through pass-through entities. As a result, HR and benefits management companies as well as law firms experience a windfall as they assist corporate clients in structuring “velvet layoffs” of their people who can still do most of the things they did as employees. By 2028, the trend is unstoppable, as many corporations have benefitted from their added flexibility, workers have grown accustomed to pass-through tax rates and Generation Z-ers have sought to delink their health insurance from their employment status. A new wave of creative accountants, meanwhile, are hailed as rock stars for exploiting the tax code’s loopholes, inconsistencies and ambiguities to create customized LLCs for their clients. Unsurprisingly, YOU Are a Corporation! tops The New York Times 2020 bestseller list.
5. The data breach business becomes a booming opportunity.
After the Great Hack of 2019, new business models that embrace breach inevitability take root. Taking the lead are insurers, who, with the help of start-ups and institutional capital, establish a robust insurance-linked securities market for cybersecurity risk. This enables underwriters to dramatically increase the cyber policies they write to businesses and allows institutional investors to tap a new, highly uncorrelated asset class. Meanwhile, consumers grow increasingly angry that they don’t adequately share in the spoils associated with use of their data. In response, credit card issuers start offering reward points in exchange for leasing “expanded access” to customers’ transaction and social media data. Still, several start-ups jump into the “Rent Your Data” movement on the premise that consumers aren’t getting a fair deal from their data lessees.
6. Asset management consolidates on the back of a shrinking equity market.
A steady stream of unicorn IPOs and a raft of new Moon Resources and SpaceTech issues in the early 2020s create a net increase in the supply of equity for a few years. Still, the broader asset management industry’s consolidation kicks into full gear as the secular shrinkage of the stock market continues and passive and smart beta investment strategies keep growing. Specialist managers who focus on niche strategies, including emerging market bonds, small cap stocks and 144A securities, occupy a rising percentage of the remaining actively managed money. Meanwhile, the popularity of Bitcoin futures brings greater retail awareness to futures markets in general and helps propel mainstream use of weather and trucking futures.
7. Politics meets utility token sales.
Groups across the ideological map battle the trend in which special interests exert undue influence over US elections through unregulated pools of “dark money” that were boosted by the 2010 Citizens United Supreme Court case. This is achieved through the establishment of 501(c)(4) utility token sales that raise “soft crypto money.” By 2028, use of so-called Citizen Voice Tokens (or CVTs), is in full swing, given the uncoordinated support CVTs provided to previous presidents and presidential aspirants including Howard Schultz, Nikki Haley, Cory Booker, Kamala Harris, Ben Sasse and Dina Powell.
8. America looks to Purdue for answers to six-figure college tuition bills.
In 2028, outstanding US student loan debt exceeds $2 trillion, the total cost of a private university education tops out at $100,000 per year and charitable giving to universities is in decline. With financial aid programs no longer able to keep up, a raft of new Big Data-infused fintech-edtech start-ups launch in the 2020s based on Income Share Agreements, which were first percolated by Milton Friedman in 1955. Under an ISA, an investor provides money to a student in exchange for a percentage of his or her future income. Multiple varieties of ISA products, some of which borrow from Purdue University’s nation-leading Back a Boiler program, take root, including one company that establishes a dominant position as the Kayak of ISAs.
9. Cannabis fuels state-sponsored Universal Basic Income programs.
Although the federal-state legal discrepancy remains nominally in effect, cannabis acquisitions by major alcohol, tobacco and pharmaceuticals companies help convince larger financial institutions that it’s okay to service the booming sector. In the Northeast and on the West Coast, this financial legitimization is an especially welcome development, as rising cannabis tax revenues (along with soaring tourist taxes and skyway drone tolls) are being used to fund state-level UBI programs after they were stymied at the federal level. These programs look much different than they did in 2017. For example, California Governor Sam Altman has signed into law a variable UBI connected to his state’s GDP.