Big data, artificial intelligence and cyber security are the principal themes. Those who invest now in the latest technology are likely to gain most from increased operational efficiency, more accurate risk selection and pricing, and greater customer focus. In particular, insurance, lending and, to some extent, asset management will be the key beneficiaries. As the companies in our review have sensitive customer data, they are all potential targets for cybercrime and will need to invest heavily to maintain security. Notable trends impacting financials include changing population demographics, urbanization, automation in the work place, and innovations such as autonomous vehicles.
Company specific thoughts:
Intact Financial Corporation makes long-term decisions and has its eyes set on the future, even if this negatively impacts short-term financial results. It is already investing significantly in AI/machine learning. Tricon has been investing in AI/machine learning within its US rental business, to optimize a wide range of processes. As its condo rental vertical grows, the company is likely to use the same tools for this business. IGM Financial has invested heavily in fintechs that could impact traditional asset management, and has made changes to pricing and processes. This will make it a far more dynamic competitor in the future.
Element Fleet Management has invested in a new fleet management system and telematics that can help customers optimize their fleets and reduce costs.
Financials: Up close
The future will be determined by those who are willing to reinvest, adapt and turn future threats into opportunities.