2020 was another great year for Robeco’s FinTech and New World Financials strategies, as both strongly outperformed their benchmarks. Despite the challenges that the financial industry still faces in 2021, we believe there is still reason for optimism on the sector. What’s more, our strategies are well positioned to benefit from the post-Covid recovery.
Vaccination campaigns are rolling out and many countries have already made significant progress. In developed markets the economic impact from the lockdowns triggered by the second and the third waves of contagion should be more muted than that of the great lockdown in the spring of 2020. Prospects of looser restrictions from the second quarter onwards should support sentiment.
Most importantly, the digital finance trend, which was accelerated by the Covid-19 shock, remains a powerful driver of growth. One of the key lessons from the pandemic has been that many incumbent financial institutions lack the flexibility and the capabilities to thrive in an increasingly digital world.
In this context, we expect fintech firms will continue to benefit from the significant IT investments many traditional banks and insurers need to make, especially for their back and mid-office operations, in order to keep up. Other key themes to watch for fintech investors include regulation and big tech, as well as an ongoing recovery for M&A and IPO activity.
Meanwhile, the swift economic recovery seen in large parts of east Asia also bodes well for financial institutions in these regions. Despite the 2020 turmoil, many stocks of financial services providers from countries such as Indonesia, China, India, Russia and the Philippines still exhibit sound fundamentals and attractive valuations.