New trends emerge all the time.
Turning them into investment
opportunities is the real trick.
The digital transformation is changing our lives radically. The rapid pace of digitisation is affecting almost all business processes and can be described as nothing less than a new industrial revolution. Global corporations are reinventing themselves or are being replaced by more innovative providers. Start-ups with smart solutions are growing to become global market leaders in the space of just a few years. However, a good idea alone is never enough. To enable change, it is also necessary to have (venture) capital.
Ulrich Graner, Senior Relationship Manager at VP Bank (Luxembourg) SA, explains what opportunities are opening up for investors who are already investing today in digital topics of the future and in the market leaders of tomorrow.
Taking advantage of the digitalisation potential
There are long-term developments, often referred to as megatrends, which have a significant influence on many areas of our lives. However, such lasting trends are not only increasingly determining what happens in our day-to-day lives but are also developing strong economic dynamics and driving the capital markets. One of these megatrends is digitisation, which is transforming all aspects of our lives. In future, everything will be both smart and interlinked. As a key driver of global economic growth, investors need to keep an eye on the digital transformation as a crucial long-range trend.
Digital innovation is taking place at an increasingly faster pace. Existing market leaders such as the big tech companies Alphabet (Google), Amazon, Facebook, Apple and Microsoft, as well as new emerging tech companies, will continue to irrevocably change the way we live, work and consume. Entire occupational categories will disappear, and new ones will emerge. As consumers, we will take up contact and interact with businesses in entirely new ways. The new business models emerging from digitisation are profound. The term disruption usually comes up when people talk about digitisation, with this term being used to refer to the destruction of current business models. The more a technology can be considered to be “disruptive”, the greater importance the financial markets attach to it.
Digital innovation will
continue to irrevocably
change the way we live,
work and consume.
The COVID-19 crisis has further accelerated the digital transformation. As the pandemic drags on, businesses are increasingly relying on digital technologies to address the challenges of working from home as well as supply-chain disruptions. Since the coronavirus outbreak, there has been a massive increase in the number of people working from home, shopping online and using digital entertainment. Companies that provide the corresponding infrastructure and product offerings are benefiting from this enormous surge in demand.
Intelligent data management and key technologies
The enormous increase in global use of the internet and digital networks represents an important basis for the dynamics of digital transformation processes. Digitisation depends on data and innovative data management as both its source and the fertile ground on which it grows. It is imperative to collect and classify data as well as to create transparency. The aim is to use analytical evaluation to recognise and optimise methods of action and decision-making. This requires the capacity to store extremely large amounts of data and to make the knowledge gained from it available in new virtual forms and applications. Cloud computing and rapid improvement of mobile processors enable easy and cost-effective access to large amounts of computing power. The investment experts at VP Bank have identified five key technologies that are crucial for digital transformation:
In their own study on digital transformation, the investment experts at VP Bank summarised the growth potential that can be derived from these technologies and the key aspects of digitisation. We published this study on our VP Bank website, and you can access it by following this link: Digital Transformation. The “Digital Transformation – The path to the future” series explains how digitisation is shaking up business models and how investors can participate.
In the currently volatile markets driven by fears of recession, we would like to use our study as an opportunity to look to the future and train our eyes on the big picture. We identified for our readers seven areas that will undergo significant transformation in the coming years and that are expected to deliver above-average growth for the industry as well as for investors. Attractive investment opportunities that we present include the areas of education, healthcare, data security and mobility.
Taking advantage of investment opportunities of the digital future
One of the most important factors for the selection of investment opportunities today is recognising the dynamic nature and potential for change in economic trends at an early stage. This makes it of urgent importance to integrate megatrends into investment processes.
The digital transformation is undoubtedly one of the most promising investment trends of the coming years. With these disruptive, digital innovations, attractive opportunities that can be exploited by investors are opening up. In this regard, VP Bank is offering selected thematic areas that enable diversified exposure with promising opportunities for excellent returns.