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THE DECADE AHEAD
At this point, in the original plan, we wanted to look at the likely trajectory of securitisation in the new decade. Based on what we heard in January the picture being painted was quite different to what we are hearing today.
It’s very difficult for people to predict the future but that doesn’t stop us trying. With COVID-19 things have changed and the extent to which the impact of COVID-19 will extend throughout the decade is not known. We’ll look first at what participants were saying pre-COVID then contrast those views with what participants are saying today.
The common themes being talked about included;
A blurring of lines between payment products and lending vehicles prompted by the rapid growth of ‘buy now pay later’ products.
“I see ‘buy now pay later’ competing directly with credit cards.” FinTech
The beginnings of the belief that the lending market was reaching saturation point and that this would limit growth of securitisation.
“I think the rate of new entrants will probably slow given the size of the market.” Intermediary
Ongoing consolidation and rationalisation of issuers as a variety of factors come into play including competition, weakening economic conditions and regulation. There is, however the underlying belief that quality will prevail.
“The cream will rise to the surface with some new froth, there is always going to be noise and froth and some of that froth will turn out to be cream, some of it will not. It is going to be always the dynamic push and there is going to be the question of regulation and other things which drive that. As soon as one group becomes too dominant, regulation will begin to focus more onto them. So I think in five years’ time you will still have volatility but there will be certainly the cream rising to the top, but not dominating it.” Investor
The narrowing of technology driven advantage as new technological capabilities become commonplace.
“We’ve got this energy and we’re doing stuff that other banks aren’t doing and customers are benefiting from it. So I’m curious to see how the banking landscape changes in general over the next five years, because we definitely won’t be the only ones doing it at that point.” NeoBank
Despite a widespread belief that FinTechs will continue to emerge and grow, no-one is willing to suggest that the banks won’t continue to dominate.
“Our success is not going to be to reduce the market share of the majors. If we take 1% of their market share, we’ll be a roaring success.” NeoBank
A belief that the world could ‘shrink’ was expressed by more than one.
“People will need to potentially be a little bit more content with where they are in life or with potentially even a bit less of what they’re enjoying because we can’t use two times the world’s resources every year after year after year and expect that it’s going to just continue.” NeoBank
And, finally that ABS will continue to grow as it satisfies the investor need for diversification and with so many new entrants willing to offer a wider spectrum of asset classes, the growth of ABS seems assured.
