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Consumer mobility shifts as the global pandemic forces change

The acceleration of consumer mobility preferences have rapidly shifted as a result of the COVID-19 pandemic, according to a new Strategy& report. The findings from Strategy&’s 9th annual Digital Auto Report focus on how Connected, Automated, Smart Mobility and Electric (CASE) strategies have had to be re-evaluated due to the global pandemic.

As a result of shifting mobility modes, the survey findings reveal most consumers are hesitant to use shared transportation. Consumers prefer to use their own vehicle over shared mobility and public transportation as a result of COVID-19. Shared mobility decreased the most in Germany with 77% of respondents intending to use less car sharing while the same holds true in both the US (56%) and in China (51%). In both China and the United States, consumers prefer the use of their own vehicle, while in Germany, the increase of commuting in cars is still equal to commuting on both bike and foot. Overall, seamless mobility solutions are still key for consumers.

Additionally, the total number of vehicles is expected to decrease in Europe (-1.2%) and increase in both the United States (+1.1%) and China (+3.9%) until 2035. This is primarily due to mobility growth (highest in China), consumer preferences for shared mobility (lowest in United States) and the average life of a vehicle until it is deposed (highest in Europe).

Though mobility preferences are changing, shared mobility providers can take steps to win back consumers, such as regular cleaning and disinfection. Consumers shared that these things are more important than lower prices in light of the pandemic.

Safety and navigation rank the highest for consumers, followed closely by vehicle management and vehicle features as a service. While connected services are important, the survey findings reveal that only consumers primarily in China (58%) are willing to pay for these services.

Gasoline continues to be the most preferred powertrain in both Germany and the United States. In China, 68% of consumers under the age of 40 prefer electric powertrains, while only 46% in Germany and 37% in the United States prefer electric powertrains.

Anil Khurana, PwC Global Leader, Industrial Manufacturing & Automotive comments, “Consumers’ mobility preferences are rapidly changing based on comfortability and technology. It’s paramount that the mobility industry quickly adapts to the new needs and expectations of consumers. CASE technologies and COVID-19 are game changers that will have lasting effects for years to come.”

Norton Rose Fulbright EMEA Chair, Farmida Bi, is awarded CBE

Norton Rose Fulbright’s Chair of Europe, Middle East and Asia, Farmida Bi, has been made a Commander of the Order of the British Empire (CBE) in the Queen’s Birthday Honours 2020 for services to the legal profession and to charity. Farmida is also Chair of the Trustees of The Patchwork Foundation.

The CBE is awarded to individuals for having a prominent role at national level, or a leading role at regional level. CBEs are also awarded for distinguished and innovative contribution to any area.

Peter Scott, Managing Partner, Europe, Middle East and Asia, said: “The firm is delighted for Farmida. She is a lawyer who specialises in innovative and market leading transactions, particularly in Islamic finance, and is a passionate advocate for social justice, who has worked tirelessly to champion social equality both within the firm and in our wider communities. It is great to see that Farmida’s work in the legal profession and her efforts to support the positive integration of disadvantaged and minority communities have been recognised.”

Financial institutions are set for a once in a generation change

The primary role of a traditional bank providing financing and capital is set to be challenged further in a post COVID-19 world by non-banks, according PwC’s report, “Securing your tomorrow, today – The future of financial services,” which predicts that alternative providers of capital are set to become an even more important part of the global financial system.

In the last 10 years, aggregate lending in USD by non-banks has outstripped the pace of growth of traditional lenders, with non-banks seeing a compound annual growth rate (CAGR) of lending of 2.3%, compared to 0.6% CAGR for banks. This trend is likely to accelerate as declining core capital ratios – caused by asset impairments resulting from the COVID-19 pandemic – will limit the lending capacity of banks, particularly in Europe. Non-traditional sources of finance such as private equity, sovereign wealth funds, credit funds and governments themselves will need to step into the breach to finance the recovery and its aftermath.

In 2019, non-banks – including private equity funds and sovereign wealth funds – lent 41 trillion dollars compared to the 38 trillion dollars lent by traditional lenders. In particular, the analysis by PwC shows that private debt has seen substantial growth, which is set to propel the asset class into a significant category of non-bank lending. Since 2010, private debt has been growing with 11% CGAR.

For established financial institutions, the rise of alternative lending brings into question a bank’s role as a capital provider versus an intermediary, according to John Garvey, PwC’s Global Financial Services Leader, PwC US.

“The rise in alternative providers of capital and the impact of COVID-19 on traditional lenders has put a spotlight on how various funding models will evolve in the future. For traditional financial institutions, this shift will have a significant impact on their business model – and ultimately their bottom line. Banks need to rapidly think about alternative ways to participate in the value chain as the industry migrates to a platform-based model.”

For insurers and asset and wealth managers, the challenges are equally daunting.

The report argues that a combination of near zero interest rates and the rise of digital-only players will create tighter margins across product portfolios, thereby emphasising the need to digitise rapidly, gain cost efficiencies and register real gains in productivity. All of this will have to be completed as governments mandate more spending and reporting on ESG initiatives. Those that fail to do so are likely to be caught in the wrong end of the coming wave of deals and restructuring.

“While the financial services industry has stood up well in light of the pandemic, it will likely be hit hardest by second-order effects. The loss of employment, the closure of businesses, the increase in debt and the volatility in markets due to the pandemic and its after-effects, along with the continued low interest rate environment, will be negatively felt throughout the real economy for years to come. The challenge for the financial services industry is in how it is able to navigate this difficult environment while balancing cost cutting and investment. Those that execute best will be the ones to succeed,” said John Garvey.

Farmida Bi recognised in HERoes 100 Women Executives List

Norton Rose Fulbright’s Chair of Europe, Middle East and Asia, Farmida Bi, has been recognised in HERoes 100 Role Women Executives List 2020. This is the second time Farmida has been included in the list. The list, supported by Yahoo! Finance, showcases business leaders who are breaking down barriers in the workplace and seeking to drive workplace equality and inclusion.

Farmida is also the firm’s European Head of Islamic Finance. She has more than 20 years of experience in capital markets and Islamic finance transactions, advising on English and New York law.

Farmida has been included in the HERoes 100 Women Executives List based on her work done internally and externally to champion women, and her recent and significant business achievements. As Chair of the firm’s Partnership Committee and Audit Committee as well as a steering group member of the firm’s Women’s Network (WIN), she has worked to recruit more women to management positions, created spaces for meaningful discussions and organised successful inclusion-focused events.

A leading individual for Islamic finance and for debt capital markets in Legal 500 UK 2020, Farmida commented:

“To be included in this list for the second consecutive year is an honour, especially alongside such talented women. At Norton Rose Fulbright, we remain dedicated to creating a workplace which is diverse and inclusive. We value diversity and the opportunities it provides to widen our horizons and understand our clients, and each other.”

Farmida has previously been listed in Financial news Most Influential Women in Europe Finance (2019) and was recognised as an “Outstanding Practitioner” at the International Financial Law Review Women in Business Law Awards. She was also listed in The Lawyer’s Hot 100 2019.

Baker McKenzie Named Best Firm for Women in Business Law

Leading global law firm Baker McKenzie took home three awards at Euromoney’s European Women in Business Law 20120 event last night, including overall Best International Firm for Women in Business Law for the fourth year running.

The awards, which took place virtually this year, due to COVID-19, recognise individual lawyers at the top of their chosen fields, and firms that have shown outstanding commitment to the development of women in the legal profession.

Baker McKenzie was also named Best International Firm for Gender Diversity, and Corinne Schot, Managing Partner of the Firm’s Amsterdam office, was named Structured Finance and Securitisation lawyer of the year.

Speaking after the ceremony, Baker McKenzie’s Global Chair of Diversity & Inclusion, Constanze Ulmer-Eilfort, said, “I am so proud of the work our firm does to champion women in the workplace and these awards reflect our continued commitment to advancing diversity and inclusion at Baker McKenzie and in the legal profession. Last year, we became the first global law firm to announce global aspirational targets set at 40:40:20 per cent gender diversity, so I am delighted that our work is continuing to be recognised. Congratulations to our winners and nominees on this well-deserved recognition.”

Post-Covid changes are permanent and there are more to come

The need for business leaders and policy makers to fundamentally rethink the way they plan, invest and operate in the future is underlined in a new survey of 699 global CEOs released by PwC.

The survey shows the majority of CEOs believe that COVID-19 pandemic driven shifts towards remote collaboration (78%), automation (76%) and fewer people working from offices (61%), are here to stay. Overall, 61% say their business model will be more digital in the future – a change accelerated by the pandemic.

Responses show digital infrastructure, flexible working and employee well-being will top their boardroom agendas as they reconfigure business operations to secure growth in the next 12 months and beyond. Fifty-eight percent of CEOs say ensuring supply chain safety will remain a focus, driving technology investments to enable tracking of products from production to delivery, and to ensure their suppliers and partners are resilient during crises.

“Business leaders need to simultaneously keep their company running today and fundamentally rethink their strategy for tomorrow, so they come out of the pandemic ready to reconfigure their business to thrive in a very different world. And they need to do that, thinking not just about the COVID-19 acceleration of change in society and the rising expectations of their broader stakeholders, but also the other issues that are going to fundamentally reshape the future of business – from climate change to populism,” says Bob Moritz, Global Chairman, PricewaterhouseCoopers International Limited.

In a challenge to decades of increased globalisation, almost two in five (39%) of CEOs believe there will be a permanent shift towards onshoring and insourcing, and a similar share expect an enduring increase in nationalism.

Kristin Rivera, Global Leader, Forensics & Crisis, PwC US, comments: “The COVID-19 pandemic has reminded CEOs of the importance of building resilience into their operating model. Firms that were able to quickly adopt digital working practices or switch their supply chains were better able to withstand the shock. CEOs now need to simultaneously contend with the unfolding pandemic and to rethink how they operate in the future. Not every innovation developed in a crisis is right for the long term, but there is much to learn.”

CEOs are naturally cautious on their own revenue growth prospects in the year ahead (45% somewhat confident, 15% very confident). 65% are predicting a decline in global growth. Concern about the global economy is highest in Africa, Central & Eastern Europe, Asia and Latin America.

Business leaders also believe the pandemic increased the importance of responding to a wider range of stakeholder issues, particularly employees. Employee support measures included health and safety (92%), well-being (61%) and financial support (24%). Forty-two percent made contributions to community organisations and almost a third (32%) of business leaders reduced their own pay. Those CEOs who maximised retention (36%) and protected employee health and safety (92%) believe it will have a positive impact on their organisation’s long-term reputation.

Bhushan Sethi, Joint Global Leader, People and Organisation, PwC US, comments: “The accelerated shift to flexible working has been valuable for many companies. Whatever new models emerge, it’s clear that employee-oriented policies that invest in safety, protection and well-being could become the new differentiator for recruitment, retention and company reputation.”

The changes driven by COVID-19 add significantly to an already full agenda for CEOs. Climate change remains an influential trend for consumers and businesses alike. When asked if the shift to climate change mitigation would endure, the majority of business leaders (47%) said it would. Business leaders believe short term increases in disposables (including sanitisers, masks) and decreases in the use of the sharing economy would only be temporary.

Limited retreat from cities

While the majority of CEOs (61%) believe that there will be lower workplace density than before, they remain divided about what role cities will play in the future: 34% believe the shift towards de-urbanisation will continue; 38% believing it is temporary.

Divided about the role of government

Business leaders are not expecting extended government support, with the majority (57%) believing state intervention to be a temporary feature, despite the potential for governments to use the support to influence COVID-19 recovery and policies impacting business. Less than one in three (30%) believe government support will be sustained, despite a gloomy outlook for global and organisational growth prospects in the next 12 months. One in five respondents say they declined government backed support for their business during the pandemic.

Bob Moritz comments: “Some CEOs may feel like they’ve passed a critical test. What’s critical now is that they use the important knowledge they’ve gained about their organisations effectively for business and society. The most enduring shift in this pandemic is the reality that it can no longer be a choice between the long and the short term. We need to address both.”