The global economy is a resilient beast. Per capita, it has grown by an average of 2 per cent per year since 1960 even as it endured war, terrorism, oil shocks and financial busts. It will doubtless weather the pandemic too, and go on to build on this impressive record.
Yet history also shows that whenever the economy has emerged from a global crisis, it has done so in a drastically altered state. Business models end up being overhauled, consumer behaviour transformed, and regulations and laws rewritten. The hyperinflation and labour unrest of the late 1970s and early 1980s, for instance, gave birth to Reaganomics and Thatcherism while the 2008 credit crisis ushered in an era of ultra-low interest rates that persists to this day.
Covid-19 is bound to have similarly disruptive legacies, says Daria Krivonos, CEO of the Copenhagen Institute for Futures Studies, a global consultancy. Among the most powerful, she believes, will be the growth of a new, contactless economy.
“With the coronavirus, there’s the painful realisation that connectedness can be a vulnerability in a great many situations,” she explains. “The avoidance of risks associated with virus transmission has become evident in many areas of the economy and I am convinced that this change will persist.”
It’s an observation that chimes with the science.
Even if a vaccine is developed, epidemiologists expect Covid-19 to remain a persistent threat to public health. Coronavirus infections, the World Health Organization has said, will ebb and flow for at least four or five years, which means restrictions such as social distancing will long outlive the very worst phase of the pandemic.
The upshot is that society will embrace technology that can minimise the disruption that comes with reduced physical contact.
Covid-19 is bound to have similarly disruptive legacies. Among the most powerful will be the growth of a new, contactless economy.
Don't show me the money
To the team of researchers at CIFS, contactless tech will become the norm in several settings.
It is already an increasingly important feature in financial transactions. Krivonos says the pandemic has forced countries to follow in the footsteps of China and Sweden, which have been operating perfectly normally as virtually cashless economies for years.
Take the UK. There, before the coronavirus outbreak, one in three transactions involved cash. Now, coins and notes account for less than a tenth of all purchases, with contactless payments rising at 16 per cent a year. Britain’s small businesses have helped hasten cash’s demise. They recently raised the limit on single contactless transactions by 50 per cent to £45, and are expected to increase it further.
“At CIFS we talk about the end of cash as one of the legacies the pandemic,” Krivonos says. “Such a change will be driven by two developments in particular.
“First, retail stores are avoiding cash due to the risk associated with the virus and second, online retail has seen a tremendous increase.”
Opponents of digital payments argue that they greatly disadvantage the poorest in society, who often don’t have bank accounts. In the UK, for example, there are some 1.5 million ‘unbanked’ adults. This is where new developments in fintech can help.
In the UK and elsewhere, a growing number of app-based challenger banks and blockchain-enabled widgets offer those who don’t have deposit accounts the ability to transact digitally. And because they bypass large financial institutions, such technologies also afford consumers greater control over their finances and personal data.
Unsurprisingly, it is in countries with less developed banking systems where e-payments are becoming dominant. With the introduction of its Unified Payments Interface, India has been leading the developing world’s charge (outside China) to a cashless society. The electronic payments network – introduced in 2016 – allows users to pay for anything from domestic appliances to street-food with phone-based apps. Some 1.3 billion payments are made using the system every month – equalling the amount of purchases made on debit and credit cards. A similar system has been rolled out successfully in Thailand while e-payment platforms are mushrooming across Africa.
“A significant reduction in the use of cash seems a likely outcome in many countries. Krivonos says. “But it’s not just a case of going cash-free. In many places entirely touchless options are preferred.”
Rise of the co-bots
The contactless economy’s ethereal reach is also extending to the factory floor. For heavy industry, adapting to new anti-virus health and safety regulations is problematic. Investing in protective workwear is one thing, but keeping the machines whirring while making sure employees do not come into close contact is quite another. Into the breach comes the collaborative robot, or co-bot.
Co-bots – machines that can work in close proximity with humans – are a relatively new technology. Yet in era of social distancing, they could become ubiquitous in industrial plants across the world. They differ from traditional robots in several important ways. Because they use greater computing power and many more of the tiny sensors and motors that allow for faster reaction times, co-bots are able to work co-operatively with – and in close proximity to – human workers.
Their technical advances mean they are ‘aware’ of people in their immediate proximity and able to stop or manoeuvre out of the way if there’s a risk of injury.
They are particularly well suited to working on assembly line stations, doing fiddly, routine jobs that people dislike while freeing up human colleagues to work on more value-add tasks like quality control and bespoke modification.
Sales of these robot systems are expected to reach some 728,000 units – worth USD11.5 billion a year – by 2025. That compares to a market worth just USD800 million in 2017 and one that has grown from virtually a standing start in 2012, according to Barclays Research.
Still, even if robots are to play a bigger part in our lives, companies be wary of taking automation too far.
“It is important that robots are introduced into such settings – but it is also important incorporate them at a pace that can be absorbed without displacing large numbers of human works,” Krivonos says.
Digital docs
The benefits of touchless systems are also self-evident in health care. With lockdowns at one point affecting almost one in three people worldwide, medical consultations and patient monitoring have undergone a rapid digital metamorphosis.
At the urging of hospitals, insurance companies, and governments, those requiring doctors’ appointments have taken to telemedicine in their millions. In the US alone, some 900 million patient visits will have been conducted by video this year – up some 64 per cent on 2019, according to health research group Frost and Sullivan.
“The interesting thing is that this technology has been in place for a while. But our habits are sticky and the use of such options was limited until the Covid-19 forced us out of the waiting rooms and into the digital consultations,” Krivonos says.
Contactless health provision isn’t just about online consultations. It is also synonymous with a plethora of medical innovations such as diagnostic devices and sensors, interactive virtual assistants, robotics technology, artificial intelligence and big data analytics.
As regulatory barriers to the use of these innovations are being steadily removed, the relationship between patient and health provider could be turned on its head.
Much will depend on how open people are to have personal details gathered and analysed digitally. “An interesting development to follow is the willingness of citizens to provide health data in an attempt to curb the virus.There are genuine worries about privacy and data security,” Krivonos says.
Provided such concerns can be addressed quickly and effectively, telemedicine could soon become the norm the world over. Frost and Sullivan estimate the industry could grow seven-fold by 2025, expanding almost 40 per cent per year.
As societies adapt to living with Covid-19, then, tech can help consumers, patients and manufacturers mitigate some of the negative effects related to social distancing. The contactless economy pre-dates the pandemic but will be greatly strengthened by it.
