Overview of the Automotive Sector’s Evolutions

The global automobile industry is on the brink of a vital transformation. Technology is driving this shift, shaped by demographic, regulatory and environmental pressures.

Mobility management has developed into a multi-billion $ industry in Europe and around the world in recent years.

More importantly, connected vehicle data continues to grow and is gaining significant strategic importance in a world of changing mobility. I.e. firstly, the trend towards sharing instead of owning, and secondly, the trend towards self-driving vehicles and electrification.

For example fleet management enables enterprises to track and maintain their vehicles in a cost-effective, quick, and accessible way. It involves functions such as vehicle tracking & diagnostics, financing, driver management, and others. It helps business organizations that depend significantly on transportation to lower or completely eliminate the risks associated with staff cost, operations, and others. Reduced fuel & overall running costs, enhanced safety, and optimized fleet operations, with real-time fleet tracking and monitoring, are the benefits offered by fleet management, which covers only a small part of the overall mobility transformation. However, fleet management is part of the solution towards some of the megatrends in the automotive industry, which will be outlined in the following chapters!

Overview of the “Connected Vehicle Data” Opportunity

A connected car is known to be a vehicle that can communicate bi-directionally with other systems outside of the car. It is armed with internet connectivity and, in several cases, a WLAN. This permits the car to download software and patches, contact and share data, connect with other internet of things (IoT) devices, and offer Wi-Fi for on-board passengers.

• Connected cars are comfortable and easy to use as they are equipped with advanced technologies which enable the driver to use apps, connect with IoT’s for safety and security, contact the dealer for maintenance and download software.
• Connected cars allow the driver to reach a destination speedily, safely, and in a cost-efficient manner.
• The connected car can even automatically stop and start the car just before the lights turn green.
• Connected cars not only connect with people and services, they can also connect with each other and the road infrastructure. These impute will become more important as self-driving cars appear.

Connected cars provide a unique customer experience while simultaneously delivering cost and revenue benefits to mobility companies, including OEMs, suppliers, dealers, insurers, fleets, tech players, and beyond.

• To date, however, most players have overlooked opportunities to monetize data from these vehicles—a significant oversight, considering how companies in other industries are aggressively generating value from data.
• In fact, seven of the ten most valuable companies in the world already generate billions in profits from data-based services. These businesses include both new attackers and tech companies.
• Players in traditional industries are increasingly following the same path and transitioning from hardware to software-as-a-service (SaaS) and subscription businesses.

The global connected car market was valued at $ 63 billion in 2019 and is projected to reach $ 225 billion by 2027, registering a CAGR of 17.1%.

Analysts predict that worldwide sales of connected vehicles will reach 76.3 million units within two years, meaning nearly 70% of worldwide new light-duty cars and trucks will ship with embedded connectivity.

The connected car technology of the near future will be a digital platform that uses a multitude of sensors, such as radar, LIDAR, cameras, ultrasonic sensors, and vehicle motion sensors to safely transport passengers and goods. Inside the vehicle, connected cars will provide immersive experiences, in some cases turning the interior of vehicles into virtual theme parks through extended reality (XR) technology. Connected car facilitates connectivity on wheels offering comfort, convenience, performance, safety, and security along with powerful network technology. This enables the driver to connect with online platforms, thereby facilitating real-time communication and sustainability.

• The amount of data that these transportation platforms must capture, transmit, and receive will grow accordingly, with data traffic from connected vehicles expected to exceed 1,000 times the present volume, surpassing 10 exabytes per month by 2025.

• Vehicles are getting increasingly more connected to each other, and advancements in road infrastructure and increasing number of sensors being used are resulting in the generation of vast data volumes.
  • Factors such as technological advancements, a rise in the production of vehicles, and an increase in demand for luxury & comfort in vehicles are expected to supplement the growth of the market.
  • Moreover, factors such as improvement in global standards for vehicles and the high maintenance cost of advanced suspension systems are anticipated to hamper the connected car market growth.
• Data collected can be leveraged and monetized, but this is currently at a nascent stage.

Smartphones have changed the definition of connectivity over time. People wish to stay connected with the outer world even while travelling. Now that connectivity has become the need of the hour, automobile manufacturers adopt connectivity solutions in their vehicles to boost their automobile sales. Consumers are expecting their vehicles to perform tasks similar to computers and smartphones.

• Adding connectivity solutions in vehicles has become the top priority for automobile manufacturers.
• Many connectivity solutions are integrated into modern cars that require internet service to perform their respective functions. Connectivity can be provided in a car using embedded, integrated, or tethered connectivity solutions. One of these connectivity solutions is used to offer Internet connection to the driver as well as the passengers who travel in the vehicle.
• Advanced diagnostic system is a feature that is expected to boost the connected cars market growth. In advanced diagnostics, the system in the car will supply data of the vehicle to both the automobile dealer and the customer, which can help predict potential automobile issues before they take place.
  • In fleet management, it is easy to track vehicle records and decide which vehicle has travelled the most and accordingly offer service with the help of connectivity solutions.
  • The diagnostic service offered is an efficient way to diagnose the status of the vehicles. It allows the consumers to manage the maintenance of their vehicle, thus saving money and time by avoiding unwanted expenses & breakdowns. The system provides a maintenance schedule and timely reminders to the consumer. The diagnostic system keeps track of the smoke emission and fuel consumption of the vehicles, thereby monitoring their engine health. The diagnostic service sends a detailed report about the vehicle to the decision maker, who decides on the service schedules for the automobile.
  • Thus, ease of vehicle diagnosis with the help of mobile applications is expected to fuel the connected car market growth.

• The safety services offered in connected cars are an appropriate example of cutting-edge aftermarket technology, which involves sharing data between the vehicle and humans.
  • Safety is a combination of telecommunication and automobile technology used to improve vehicle efficiency, reduce fuel consumption & maintenance cost, enhance security & safety measures, and assist the driver to enhance his overall driving experience.
  • Driver assistance system is another feature of the connected cars that helps the driver find the most appropriate route to reach the destination. It also prompts alert messages regarding traffic jams and parking space availability.
  • All these connected car features provide intelligent transportation systems, which are designed to improve the overall driving experience.

The automotive data monetization is segmented into on-premises and cloud.

• The Cloud segment accounted for a larger revenue share in 2020 due to better scalability, improved cost-efficiency, increased reliability, and faster time to access new technologies as a readily available service. Cloud-based deployment is a key solution for OEMs due to these benefits.

Mobility Management – Cloud Solutions Opportunity

Cloud-based solutions have become the most essential technology for many business professionals across the globe for several simple to complex operations.

The Mobility industry is one of the complex environments that have witnessed rapid technological growth in the last decade.

• Nowadays many automotive company giants are opting for cloud-based solutions for handling different aspects ranging from engineering simulations to business dealings.
• Cloud bases solutions offer many cutting-edge solutions to the automotive industry, it can automatically create data backups, so automotive entities don’t need to worry about important data in case accidental data loss occurs and also help manufacturers to access green technology to develop environmentally friendly vehicles for consumers.
• The usage of cloud computing technology has enabled the automotive industry to store data reliably in the cloud storage and then later relay this data to the vehicle’s infotainment and telematics system, advanced driver assistance systems, and mobility services. Cloud computing ensures a seamless distribution of data within all the vehicle’s systems.

Cloud-Based Solutions Market designed for all aspects of Mobility is segmented on the basis of deployment type, application, vehicle type and region. Based on deployment type the global market is segmented into private cloud and public cloud. Based on application type the market is divided into Fleet management, infotainment, over-the-air (OTA) updates, telematics, ADAS and other services.

Mobility Cloud-Based Solutions facilitates the flow of data generated from the vehicle, vehicle users and surrounding environment around vehicle and processes the data in order to provide actionable insights, decisions, or tasks to the user.

• In connected vehicles using cloud-based advanced driver-assistance systems (ADAS) services like Collaborative Intelligent Transport System (C-ITS), Vulnerable road user protection, and Human-Machine-Interfaces (HMI), the driver is informed about the road & traffic conditions, pedestrian’s presence in blind spots, lane assistance, charging stations, parking assistance, and simplification of road signs along with the navigation. Stringent government policies related to autonomous vehicles’ safety issues and privacy concerns are expected to increase the deployment of cloud solutions that are able to enhance the decision making of the autonomous driving algorithms.
• The increasing favorable trend towards the connected and autonomous vehicles that enhance the safety of driver and pedestrians are the driving factors for the increased deployment of the cloud solutions in automotive. Smartphones and internet connectivity with developments in the 5G technologies is expected to contribute to rapid growth in the connected vehicles as well.
• Increasing penetration of ride-sharing service providers that are driven by the virtues of affordability and eco-friendliness utilize cloud-based automotive telematics technology to provide on-demand mobility, as outlined in the following chapter.
• The use of telematics technology facilitates the ride-sharing service company to optimize the fleet by means of planned maintenance, remote monitoring of vehicle health, and reduce accidents by eliminating the harsh drivers.
• Increasing consumer demand for cloud-based infotainment services has urged ride-sharing service companies to integrate different cloud solutions into the vehicles.
• Expansion of the logistics & transportation sector on account of the booming e-commerce sector and growth in supply chain optimization efforts has led incumbents to employ fleet management cloud solutions in order to optimize the operations & supplement cost reduction. The use of fleet management cloud solutions is contributing to Global Automotive Cloud-Based Solutions’ market growth.

Vehicle Electrification and the trend towards sharing instead of owning

The Global Electric Vehicle Market size is projected to grow from 4,093 thousand units in 2021 to 34,756 thousand units by 2030, at a CAGR of 26.8% according to MarketsandMarkets. Factors such as growing demand for low emission commuting and governments supporting long range, zero emission vehicles through subsidies & tax rebates have compelled the manufacturers to provide electric vehicles around the world. This has led to a growing demand for electric vehicles in the market. Countries around the world have set up targets for emission reductions according to their own capacity.

Increasing investments by governments across the globe to develop EV charging stations and Hydrogen fueling stations along with incentives offered to buyers will create opportunities for OEMs to expand their revenue stream and geographical presence. The market in Asia Pacific is projected to experience steady growth owing to the high demand for lower cost-efficient and low-emission vehicles, while the North American and European market is fast-growing markets due to the government initiatives and growing high-performance Passenger vehicle segment. However, the low presence of EV charging stations and hydrogen fuel stations, higher costs involved in initial investments, and performance constraints could hamper the growth of the global electric vehicle market. In addition, there is still no comprehensive solution that covers all aspects of the 4 ACES and is accessible as a one-stop shop solution, whereby the number of API interfaces to vehicle data, process data and charging infrastructure in connection with real-time IOT plays an essential role, especially for commercial and public purposes.

Summary of the EV market dynamics

• Driver: Reducing the cost of EV batteries

Due to technological advancements and the production of EV batteries on a mass scale in large volumes, the cost of EV batteries has been decreasing over the past decade. This has led to a decrease in cost of the electric vehicles as EV batteries are one of the most expensive parts of an electric vehicle. In 2010, the price of an EV battery was around USD 1,100 per kWh. However, by 2020 their price fell to around USD 137 per kWh while the price is as low as USD 100 per kWh in China. This is because of reducing manufacturing costs of these batteries, reduced cathode material prices and greater volumes of production, etc. The prices of EV batteries are expected to fall to around USD 60 per kWh by 2030, which will greatly reduce the price of EV’s making them cheaper than conventional ICE vehicles.

• Restraint: Lack of EV charging infrastructure

There is a low number of EV charging stations in many countries around the world. This makes the possibility of public EV charging less thereby reducing the demand for electric vehicles. Although many countries are working on developing EV charging infrastructure, most countries haven’t been able to develop an appropriate number of EV charging stations except in some states. The demand for EV’s will increase once there is a well-developed EV charging network across the world. Most countries are yet to develop such charging networks across their region. The Netherlands has the highest EV charger density per 100 km’s.

• Opportunity: Government initiatives pertaining to EV’s

Countries around the world have set up targets of around 2050 to reduce vehicle emissions. They have started promoting the development and sales of EV’s and related charging infrastructure. For instance, the US government invested USD 5 billion in 2017 to promote electric vehicle infrastructure such as charging stations. Several governments are providing various kinds of incentives such as low or zero registration fees and exemptions from import tax, purchase tax, and road tax. Furthermore, countries such as Norway and Germany are investing significantly in promoting sales of EVs. Thus, due to the large incentives and subsidies in Europe, a high growth rate in the sale of electric vehicles is observed. This has led to the growth in the demand for components and equipment associated with EV charging operations such as charging cables, connectors, adapters, and portable chargers. Also, as part of a partnership between the US departments of energy and transportation, a 2020 vision for a national fast-charging network has been developed, with potential longer-term innovations which include up to 350 kW of direct current fast charging. Stringent CO2 emission norms have increased the demand for electric vehicles. Governments are investing significantly in providing incentives and subsidies to encourage sales of EVs. These steps taken by governments around the world will help in increasing demand for EV’s in the coming decade.

• Challenge: Insufficient standardization of EV charging infrastructure and siloed data

Factors such as the growth of the electric vehicle market and variation in charging loads have emphasized the need for the standardization of electric vehicle charging stations as well as the corresponding underlying platform and software solution. Certain EV charging stations may only be compatible with a certain type of voltage. For instance, AC charging stations provide a voltage of 120V AC through level 1 charging stations and 208/240V AC through level 2 charging stations. On the other hand, DC charging stations provide fast charging through 480V AC. Governments need to standardize charging infrastructure for the development of a favorable ecosystem and an increase in the sales of EVs. Though, this mandate increased the installation cost of charging stations and hence in July 2019, the government changed the guidelines and allowed charging station developers to choose the method they prefer. US-based electric car maker Tesla uses high-performance superchargers that are unique to Tesla and cannot be used for other EVs (which might change in the near future). The lack of standardization across countries may impact the installation of charging stations and hamper the growth of the Electric Vehicle Charging Station market.

• The passenger car segment to be the largest segment during the forecast period

The electric vehicle market for passenger cars is largest in Asia Pacific followed by Europe and North America. In Asia, China, Japan and South Korea are the countries leading the passenger EV market in the region. This is due to the strong government support for passenger EV’s in these countries. Germany, France, Netherlands, Norway, Sweden, UK, etc. are the top countries in the European region with a growing demand for EV passenger vehicles. These countries have come out with string of emission regulations and a variety of subsidies, grants and incentives for shifting to EV’s. in 2020, due to these measures, Europe’s EV sales went beyond China’s EV sales. North America is also increasing EV passenger car demand with various states in US and Canada leading the electrifying trend. MEA countries have started to increase their EV’s market and are expected to be the fastest-growing market in the coming years.

Those who succeed in breaking down these silos will make an important contribution to simplifying and implementing sustainable electrification and accelerating mass adoption. This also goes hand in hand with the consumer shift from a seller’s to a buyer’s market and today’s trend to use goods and services cost-efficiently and sustainably in the short term to satisfy a specific need. Therefore, the idea of ownership is increasingly fading into the background in favour of shared services. Airbnb, Uber and WeWork are just a few prominent examples of this shift and especially in the transport/mobility and logistics sector (with almost no industry directly excluded), we see increased initiatives to further promote this. These include car, bike, scooter and other shared services, which should contribute to providing sustainable and cost-efficient solutions for reducing CO2 emissions in cities and suburban areas, reducing traffic congestion and making transport and mobility smarter, and also promoting safety and maintenance in the context of connected and autonomous vehicles.

The shared mobility trend

According to McKinsey’s 2020 ACES consumer survey, more than 60 percent of people would share their shared-mobility ride with a stranger if doing so would add less than 15 percent to their travel time while reducing their cost. In recent years, new modes and services have emerged, such as pooled ridesharing with strangers, peer-to-peer car sharing (driving a stranger’s private car), and shared electric scooters, pointing to a sizable potential market in the mobility space. The next big things include autonomous taxis (so-called robo-taxis) and airborne varieties, which have seen a huge investment acceleration and traction in recent months.

The shared-mobility market accounted for approximately $130 billion to $140 billion in global consumer spending in 2019. Out of this, e-hailing accounted for the largest share, $120 billion to $130 billion, which is more than 90 percent of the total market. Taken together, car sharing and peer-to-peer car sharing account for less than 10 percent of this market, which reflects e-hailing’s higher convenience (that is, the customer is driven, can spend the time in the vehicle on other activities, and does not have to find a parking space).

McKinsey’s forecast shows micromobility could reach a consumer-spending potential of $300 billion to $500 billion globally by 2030 (combining shared and private micromobility), thus becoming three to four times larger than today’s global e-hailing market. This amount could grow even higher as the pandemic winds down and normal activities resume.

Since 2010, more than $100 billion has been invested in shared-mobility companies. Looking deeper into types of investors, it’s not the automotive players that are investing in shared-mobility companies. Instead, around 72 percent of the total amount of disclosed investment since 2010 has come from venture capital and private-equity players, suggesting a bet on the future rather than on established and already sustainable business models. Tech players are second at approximately 21 percent, while automotive-company investments amount to approximately 4 percent. One reason for the traditional automotive industry’s lackluster showing could involve shared mobility’s potential for disrupting an automotive player’s core business. Some automotive OEMs have attempted to face the challenge through in-house initiatives rather than investments in external, new startups. This displays a mindset shift from selling vehicles to providing shared-mobility services, while the latter may even cannibalize OEMs’ core business of selling cars to private individuals.

Survey respondents said that their main reason for using shared mobility is convenience. This reflects today’s dominance of e-hailing over other shared-mobility modes. The most important features of shared-mobility services for consumers are safety, a competitive price, and availability. The latter, especially, might be an important factor in shared mobility’s ability to replace private-car ownership in the long term. Notably, availability is the most important feature for German consumers.

Overview of the Global Luxury Market

In the past year, the value of the US dollar has risen against most major currencies, driven by the relative strength of the US economy, the expectations of tighter US monetary policy and other known factors.

The global luxury goods sector is expected to grow more slowly in 2022, at a rate many retailers may find disappointing. The growth rate is slowing in important markets such as China and Russia, although some markets continue to perform well, and there are pockets of opportunities across the globe. India and Mexico for example, are proliferating, and the Middle East offers further growth potential. The European luxury goods market has bounced back since the difficult days of the middle of 2010-2020, but national economies are growing at different rates. Overall, market growth is slow but steady, with both domestic shoppers and wealthy tourists cautious about spending.

The global luxury market exceeded €1.1 trillion in 2021 – a strong growth of more than 15% following the contract in 2020 due to the pandemic.

• Growth in the luxury car market was solid, up 8% from 2020, driven by positive trends in both the US and Europe. Luxury hotel sales, up 7%, benefited from steadily growing demand, particularly in Europe.
• Personal luxury goods — the “core of the core” of luxury and the focus of the Bain Luxury Study — ballooned to more than € 280 billion in 2021, more than tripling over the past 20 years. This represents 29% growth over 2020 at current exchange rates.

Trends shaping the luxury market:

• Luxury cars, luxury hospitality, and personal luxury goods together account for 80% of the total market. According to Bain’s forecasts, the overall luxury market grew back by 13% to 15% in 2021, to €1.14 trillion, 9% to 11% below 2019 levels. All segments except luxury cruises resumed growth, but only luxury cars, personal luxury goods, fine wines and spirits, and high-end design furniture were able to grow enough to exceed their 2019 levels.

• Overall, spending shifted from intangible experiences to tangible products in 2021. That’s visible in the different recovery trajectories of luxury goods vs. luxury experiences. The steepest recovery in 2021 belonged to personal luxury goods and furniture/housewares, now marginally ahead of 2019 levels. Experience-based goods are not far behind. Experiences should be the last to regain their 2019 peak.

• The market for personal luxury goods—the heart of the whole luxury industry—enjoyed a V-shaped recovery after its worst dip in history in 2020. Sales were set to beat their pre-Covid record in 2021, with the market forecast to grow by 29% at current exchange rates to €283 billion, up 1% from its 2019 record.

• The main challenge facing most luxury brands is establishing a suitable pricing model. The rise of e-commerce and global tourism growth create greater transparency around international price differentials. In addition, price-conscious luxury shoppers are struggling to reconcile the price of luxury products with their real value. As a result, luxury brands must assess how to mitigate volatility and how best to deliver at local and global levels. This includes managing inventory to accommodate fluctuations in tourist spending and coordinating pricing and markdowns across markets and channels.

Overview of the Watch Market

The Global Watch Market was valued at $ 93 billion in 2021 and is projected to register a CAGR of 5.02 % during the forecast period (2022-2027).

• The watch market is segmented by product types into quartz watches and digital watches. The digital watch is further segmented into smart and others.
• By price range, the market is segmented into low-range, mid-range, and luxury.
• By end-user, the market is segmented into women, men, and unisex.
• In terms of the distribution channel, the market is segmented into offline retail stores and online retail stores.

China, Japan, and India significantly contribute to the sheer market value of the watch in the Asia-Pacific region. China is one of the most competitive markets in the world, as it offers enormous potential for manufacturers of luxury watches to acquire and compete. China accounts for over half of watches exports in the world in 2020 as per ITC Trademap. Rolex, Omega, Patek Philippe, Cartier, Channel, Longines, Tissot, Rado, Blancpain, and Piaget are some of the prominent luxury watch manufacturers having presence in the region. These Swiss watches are loved across the globe; in 2021, it witnessed a growth of 3.5 % in watches exports when compared to 2019.

There is no official data on the world’s production of watches. If it can be estimated at about 1.3 billion pieces, export and import results are higher because a product may be re-exported and thus be counted twice. However, these data reflect the forces involved very well and help identify trends facing the industry worldwide.

Only a handful of countries dominate the global watch industry. Ten countries – Switzerland, Hong Kong, China, Germany, France, Singapore, Italy,  Japan, the US, and the UK – account for more than 90% of global exports of watches and watch parts, the first three being way ahead of the others. The fact that these 10 countries are simultaneously the most significant importing countries is evidence of the high degree of interdependence between their watch industries. The individual countries are, to some extent, specialized in different watchmaking products and steps in the production process.

Leading watch-exporting countries worldwide in 2019 & 2020, based on the number of units

Between them, the Swatch Group, Richemont and Rolex constitute about 50% of the global watch market and are considered key players in the industry. Fossil (USA) is in the fourth position; it overtook the place of LVMH. The three largest Japanese watchmaker players (Citizen, Seiko and Casio) have 10% of the market share, having still fewer shares than Rolex alone.

Estimated market share of the leading watch brands worldwide in 2020

The Value-chain of the sector:

Watch-making is divided into two distinct branches: luxury watches (Haute-Horlogerie) and the fashion segment (low-end).

• The first includes all works whose complete perfection is the main merit. It is necessary that the machine, handled by a workman, is accurate in all its parts. In contrast, the fashion segment focuses on the exterior forms of the watch.
• The idea of Haute Horlogerie is thus associated with its origin in excellence and product complications. But if we want to be more precise on the segmentation of the industry, it can be divided into four price categories: mass (Under USD $600), middle ($600 – $1,500), upper ($1,500 – $10,000), and luxury ($10,000 and higher) watches.
• Watches in the low-end segment consist in most cases of radio-controlled and digital watches, whereas the high-end watches are mechanical.
• The key players and the most important countries that are concerned by the global clock & watch industry are Switzerland, Japan, Hong Kong, and Mainland China. Switzerland has a reputation and almost monopoly in the luxury segment, whereas Japan, Hong Kong, and China are very efficient and influential in the low-end segment.

In order to understand the strategic choice of watch companies of where to produce and what key factors should be analyzed, the process of making a watch needs to be defined. When a company decides to delocalize or change its centre of production, there is always a reason why it is done. First of all, every watch needs to be elaborated on computer design. Major brands, including Rolex, Swatch, and Patek Philippe, have their own design offices within their company, but small independent design companies exist for brands that decide to outsource their design phase. Raw materials that can be used vary from the quality and price of the watches. Basic and low-end watches are made of plastic, titanium, or stainless steel, whereas luxurious watches are made of silver, gold, carbon, diamond, platinum, or ceramic. Thus, raw materials need to be accessible on the production/manufacture site. The manufacturing process is one of the most important steps and is divided into two phases. The first one is about shaping and tailoring the components of the watch. It can be hand-made or machine-made. The second one, which is the most noteworthy because it requires excellent knowledge and skills, is the process of manufacturing and assembling the watch components. Labour must be qualified to operate on specific machinery to shape particular parts. Thus, the location of this manufacture must be studied very cautiously because of the need for skilled labour and the availability of adequate machinery.

Quality control is the last step before the watch is shipped to retailers. It consists of checking possible defects to ensure high quality. This control can be made at the end of the production line for small and low-end watches, but the most luxurious and essential brands set the control at the earliest point of the manufacturing process.

The Great Hong Kong region clock & watch industry is the most crucial key player in the industry together with the Swiss one. Yet, a difference lies between production and sales. If the Great Hong Kong region is perceived as a competitor in terms of brand production in Switzerland, it is not the case in the retail sector as it is the largest market for Swiss brands, which realize the majority of their sales there (in Hong Kong only). Chinese domestic firms aiming to compete in the low-end segment want to upgrade their production to move to the middle and high-end verticals.

Real Estate Market

Real estate is a significant component of the economy’s capital stock and households’ wealth, which serves as both a crucial input for producers and providers of residence. Investment in real estate can be categorized according to its use as either commercial or residential.

• Commercial real estate typically accounts for around half of business assets whilst residential real estate constitutes one-third of household net worth.

As a result, the construction sector lies in an influential position as a significant contributor to the business cycle.

Overview of the Construction Industry

The construction industry, and its broader ecosystem, are the foundation of our economies and are essential to our daily lives.

• However, the industry also has performed unsatisfactorily in many regards for an extended period of time. The COVID-19 pandemic may be yet another crisis that wreaks havoc on an industry that tends to be particularly vulnerable to economic cycles.
• The construction value chain includes a wide range of economic activities, going from the extraction of raw materials, the manufacturing and distribution of construction products up to the design, construction, management and control of construction works, their maintenance, renovation and demolition, as well as the recycling of construction and demolition waste.
• As such, the construction sector plays a vital role in delivering the global goals for smart, sustainable and inclusive maturation.

Construction, which encompasses real estate, infrastructure, and industrial structures, is the largest industry in the global economy, accounting for 13% of the world’s GDP.

• According to Global Construction, the volume of construction output will grow by 85% to $ 15.5 trillion worldwide by 2030, with three regions – China, the US and India – leading the way and accounting for 57% of all global growth.
• In Europe more specifically, it generates about 9% of GDP (so a market worth 1.5 trillion Euro) and provides 18 million direct jobs.

The lagging performance of the construction industry is a direct result of the fundamental rules and characteristics of the construction market and the industry dynamics that occur in response to them. Cyclical demand leads to low capital investment, and bespoke requirements limit standardization. Construction projects are increasingly complex, and logistics must deal with heavy weights and many different parts. The share of manual labour is high, and the industry has a substantial shortage of skilled workers in several markets. Low barriers to entry in segments with lower project complexity and a considerable share of informal labour allow small and unproductive companies to compete. The construction industry is extensively regulated, subject to everything from permits and approvals to safety and work-site controls, and lowest-price rules in tenders make competition based on quality, reliability, or alternative design offerings more complicated.

The construction industry was already starting to experience an unprecedented rate of disruption before the COVID-19 pandemic. In the coming years, fundamental change is likely to be catalyzed by transformations in market characteristics, such as scarcity of skilled labour, persistent cost pressure from infrastructure and affordable housing, stricter regulations on work-site, sustainability and safety, and evolving sophistication and needs of customers and owners. Emerging disruptions, including industrialization and new materials, the digitalization of products and processes, and new entrants, will shape future dynamics in the industry.

Customers and owners are increasingly challenging, and the industry has seen an influx of capital from more savvy customers. Client demands are also evolving regarding performance, TCO, and sustainability: smart buildings, energy and operational efficiency, flexibility and adaptability of structures will become higher priorities. Expectations are also rising among customers, who want simple, digital interactions as well as more adaptable structures.

Overview of the Challenges of this Industry

Towards a zero-emission, efficient, resilient building and construction sector.

The EU Member States retain the competency to regulate issues such as safety, indoor air quality, noise and radiation. They also have the responsibility to implement European legislation. Local authorities have an essential role to play in the promotion of low-carbon and resource-efficient cities, building on the involvement of stakeholders and citizens.

• Sustainable construction can be defined as a dynamic between developers of new solutions, investors, the construction industry, professional services, industry suppliers and other relevant parties towards sustainable development.

• Sustainable buildings combine improved energy performance and reduced environmental impact throughout their life cycle. Their users enjoy better health, well-being and productivity gains that translate into cost savings. Buildings have the potential to reach a 90% reduction of their greenhouse gas emissions by 2050.

• The EU is aiming for a 30% cut in its annual primary energy consumption by 2030. The building sector, together with public transportation, has tremendous potential for savings.

CO2 emissions from the building sector are the highest ever recorded:

This industry must eliminate all CO2 emissions from the built environment by 2040 to meet 1.5° climate targets.

• The built environment generates nearly 50% of annual global CO2 emissions. Of those total emissions, building operations are responsible for 27% annually, while building materials and construction (typically referred to as embodied carbon) are responsible for an additional 20%.

• In 2040 approximately 2/3 of the global building stock will be edifices that exist today. Without widespread building decarbonization across the globe, these facilities will still emit too much CO2 in 2040, and we will not achieve the Paris Agreement’s 1.5°C targets.

• Global building floor area is expected to double by 2060. Achieving zero emissions from new construction will require energy-efficient buildings that use no on-site fossil fuels and are 100% powered by on- and/or offsite renewable energy.

• Just three materials – concrete, steel, and aluminium – are responsible for 23% of total global emissions (most of these are used in the built environment). There is an incredible opportunity for embodied carbon reduction in these high-impactmaterials through policy, design, material selection, and specification.

• To achieve a net-zero carbon building stock by 2050, the IEA estimates that direct building CO2 emissions would need to decrease by 50% and indirect building sector emissions decline through a reduction of 60% in power generation emissions by 2030. These efforts would need to see building sector emissions fall by around 6% per year from 2020 to 2030. For comparison, the global energy sector CO2 emissions decreased by 7% during the pandemic.

• Investment in energy efficiency in buildings is picking up again, but the speed of change lags behind overall building construction investment. Building decarbonization commitments are growing. But they need to rapidly increase in scale and pace to achieve the Paris Agreement goals.

• The time for action to decarbonize the existing and future global building stock is now.

Overview of the Solutions to address these Challenges

Development and implementation of new technologies are needed to reduce the demand for construction materials and enable their circularity and contributions to resilience.

• This includes designing innovative circular materials and products that can be fully recovered in closed-loop processes; intelligent selection of materials for components and structures with minimized life cycle impact using material libraries; rightsizing and light-weighting of components and systems; consideration of thermal properties of construction materials in relation to regional needs; structures with extended lifespans, suitable for deconstruction and reuse of materials and components.
• It is equally important to include material processing and fit-for-purpose cement based on local feedstocks produced with less energy, emissions, and impact; closed-loop production cycles. Activities such as manufacturing and construction use digital systems to track materials and prevent excessive use.

Adopting offsite (modular) construction for disassembly and enhancing additive manufacturing with closed-loop materials for waste avoidance will further result in material efficiencies.

Offsite manufacture for construction is a manufacturing-based approach involving the production of components of buildings (e.g., foundations, roof cassettes, walls, floors, kitchen, and bathroom units) or whole (modular) units of a building in a factory for installation on-site. Offsite construction manufacturing is increasingly associated with greater use of digital technologies at different process stages.

• In recent years, a wide range of advantages of deploying modular homes has been put forward. The most crucial of these relates to tackling housing shortages and addressing housing affordability problems, low housing quality and maintenance issues.
• In light of the housing shortage and the failure of traditional housebuilding approaches to deliver new homes at the required rate, a number of governments/countries worldwide have identified a need for innovation in the construction industry. New developments in construction aim to enhance productivity, speed up delivery and overcome delays, reduce the cost and use of on-site labour, reduce the environmental impacts of construction, and improve the overall quality of the end product.

The need to address sustainability challenges has been brought to the fore on the agenda of the whole sector. Emphasis on energy efficiency standards, and commitments to reducing carbon emissions across the construction industry, also derive from the world’s leading governments’ commitment to achieving carbon net-zero by 2050.

There are numerous benefits of non-traditional and offsite construction, including the speed of on-site operations; fabrication quality; safer working conditions; material efficiency, reduced waste; and less noise and disruption for residents and neighbours:

• Modern construction methods are expected to improve industry productivity, although many developers experimenting with modular home building have yet to find the process either quicker or cheaper than a traditional build. It is expected that if such methods could be deployed at a grander scale, they may provide an opportunity to deliver new homes more quickly, with higher quality and at a potentially cheaper cost than traditional methods. Such advantages are based on high-precision, factory-based approaches to construction. Increased speed of construction means that offsite manufacture for housing construction could be a valuable tool in attempts to increase the numbers of new-build housing units at a rate fast enough to meet government housing supply targets.

• The automated processes, offsite factory production of components, digital systems and other innovative elements that are a part of the use of offsite manufacturing require less time and input from construction workers on-site. They could therefore help address the labour shortages the construction industry is currently facing.

• The traditional housebuilding approach involves assembling multiple components (e.g., bricks, windows and door sets, etc.) in an open-air, site-based environment by workers from various trades and sub-trades. When numerous subcontractors are involved in the construction process, on-site rectification of design problems and poor inter-trade coordination often result in increased reworking, contributing to poor overall quality. Prefabrication of components or structures can reduce the need for on-site design alterations and reworking late in the construction process, both of which are time-consuming and costly.

• Offsite manufacture of housing and modern methods of construction can create opportunities for better build quality.

• The current model of construction is highly localized, whereas modular construction involves the outsourcing of many stages of the construction process to specialized facilities or factories, thereby reducing the time taken for installation on site. Modular construction creates less disruption for the local area and residents, including reductions in noise, dust, and road blockages.

The potential for offsite and modular technologies to help tackle the problems related to the housing crisis and open up opportunities for advances in the construction sector is widely recognized. These innovations could deliver faster construction speed, better quality of housing and could provide a ‘golden thread’ of information needed for effective management and maintenance of housing.

Global Tiny Homes Market

Tiny homes are full-fledged dwelling units that are less than 500 square feet and have the basic amenities of a permanent home. They have evolved over the recent decades and come in many styles and designs, appealing to people from all walks of life, retirees, starter home-seeking couples, and minimalist young people, among others. Tiny homes offer a wide range of quality, affordable, and environmentally friendly housing that can be used to meet personal dreams, financial and lifestyle goals, and community needs.

The market share is expected to increase by USD 3.57 billion from 2021 to 2026, and the market’s growth momentum will accelerate at a CAGR of 4.45%. In 2022, North America is expected to dominate the market due to changing lifestyles and the rise in investments and initiatives towards the construction of tiny homes for both commercial and residential.

The key factor driving growth is its affordability by the mass section of the population. Tiny homes are recognized as the most affordable housing system, preferred especially by millennials as recent studies show. Tiny homes are just a fraction of the price of traditional homes and can be designed based on customers’ requirements. Increasing usage of tiny homes in tourism activities is another important driver for the global tiny homes domain. The rising inflation leading to a rise in living costs and the increasing popularity of affordable housing solutions, and the tiny-house movement are expected to propel the development of the global sector.

Tiny homes do not require permits in many parts of the world as they are considered vehicles depending on their size and specificities. Many families have invested in tiny houses and then rented them to people. Some service providers even rent their tiny homes in various architectural and decor styles. These styles depict modern or minimalist to rustic or traditional as a unique alternative to the hotel stay. They equip the tiny homes with a kitchen, living space, bathroom, and sleeping area. Various factors, such as globalization, internet penetration, and growing social media influence, have boosted the demand for tiny homes. Furthermore, new lifestyles, higher disposable incomes, and increasing consumer environmental awareness create demand. This, in turn, is expected to act as a driver for the growth of the global market in addition to the recently emerging trend for mobile houses, which are easier to set up and dismantle and therefore also offer short-term possibilities for use.

Market Overview

Serious diseases have traditionally been treated using drug therapy, which aims to manage the disease rather than cure it. More recently, advanced gene-therapy products, such as lentiviral vectors, have been used to permanently restore health to those suffering from severe disease.

• Lentiviral vectors have been used to cure monogenic gene disorders by targeting bone marrow stem cells that give rise to mature immune cells. Conditions such as severe combined immunodeficiency (SCID), Hunter’s disease (and other storage disorders), Sickle Cell Disease (SCD), and Beta-Thalassemia are all primary examples.
• Lentiviral vectors are the critical component of the revolution in the treatment of blood and other cancers, known as CAR-T cell therapy. Lentiviral vectors are used to modify white blood cells called T cells from the blood that then effectively recognize and kill the cancer cells in diseases such as leukaemia, lymphoma, and multiple myeloma. Kymriah®, Yescarta®, Tecartus®, Breyanzi®, Abemca®, and Carvykti® are all examples of FDA approved CAR-T cell products. There are a large number of CAR-T cell products in development requiring vector manufacturing services.

Understanding the Gene Therapy Opportunity

The basic idea of gene therapy is to introduce genetic material into cells to replace mutated genes or provide instructions to produce an advantageous protein.

For the gene of interest to reach the inside of the cell, it has to be packaged into a carrier vehicle. Mostly, these vehicles are viral vectors, but there are also non-viral carriers. Viral vectors are most often used as carriers because they can deliver the gene of interest with high efficiency using the natural mechanism for infecting cells. The viral vectors are engineered, so they are incapable of causing disease in humans. In gene therapy, the viral vector is composed of the capsid, the virus’s protein shell that carries the genetic material and envelope proteins that allow for binding and entry into the targeted cell.

• The viral vector carrying the gene of interest enters the cell through the cell membrane. At this stage, the viral vector is packaged into a vesicle and transported to the cell’s nucleus. Here, the vesicle disintegrates, and the viral capsid disassembles, releasing the gene of interest into the cell’s nucleus through a nuclear pore.

• Some viral vectors integrate the gene of interest directly into a chromosome once they enter the human cell’s nucleus. Other viral vectors, such as adeno-associated viral vectors, deliver their genes into the nucleus but do not integrate it into the cell’s genetic material.

• Gene therapies can be delivered either in vivo – where the viral vector is injected or administered intravenously into the body – or ex vivo, where a patient’s cells are removed, the viral vector is then inserted into these cells outside of the body, and the cells containing the vector are reintroduced into the patient.

Gene Therapy Delivery Vehicles:

• VIRAL VECTORS

The inability of viruses to self-replicate unless they infect a living cell is a fundamental reason they have become so valuable for gene therapy development. In essence, viral vectors are modified viruses that contain the viruses’ gene delivery skills while their pathogenic characteristics have been removed. A number of viral vectors have been developed to introduce genetic material into target cells. In gene therapy, the cargo can either replace a mutated, disease-causing gene with a healthy gene, inactivate an improperly functioning gene, or introduce a new gene into a patient’s body to help fight a disease. Today, there are four main viruses used as biotherapeutic vectors: retroviruses, lentiviruses, adenoviruses, and adeno-associated viruses. Each of these viral vectors comes with its own limitations and advantages.

• NON-VIRAL GENE THERAPY DELIVERY

A number of drawbacks associated with viral vectors have led to the study and development of non-viral vector solutions for gene therapy delivery into target cells or tissues. These drawbacks include manufacturing bottlenecks, upscaling challenges, cancer-causing mutations, and immunogenicity of viral vectors.

Non-viral administration methods can address a number of these limitations, especially those associated with safety. Synthetic gene therapy delivery vehicles, for example, usually have lower immunogenicity than viral vectors because patients will not have pre-existing immunity, which is the case with some viral vectors. Many non-viral vectors are also easier to manufacture and can deliver much larger genetic cargoes than some viral vectors.

Despite these advantages, very few of these non-viral vector solutions are actually used in the clinic, as they have their limitations. The main challenge currently facing non-viral vector solutions is the effective delivery of genetic material into mammalian cells due to many barriers, such as potential vehicle degradation before it can even reach the target cell.

Overview of the Market size & Potential

The Gene Therapy Market was estimated to be $ 4.2 billion in 2021 and is poised to grow at a CAGR of 26% by 2027 to reach $ 14.8 billion.

• The COVID-19 pandemic is anticipated to have a positive effect on the gene therapy market. Gene and cell therapy technology are expected to be extensively used in the development of vaccines used to treat COVID-19.
• The growth of this market is driven by the high incidence of cancer and other target diseases, the availability of reimbursements, and the increased funding for gene therapy research. However, the high cost of gene therapies is envisioned to hamper the market growth to a certain extent during the forecast period.

Investment in research and development (R&D) activities are also expected to have a significant effect on the market. Several companies aim to build a gene therapy platform with a strategy focused on establishing a transformational portfolio through in-house capabilities and enhancing those capabilities through strategic collaborations, expansion of R&D movements, and potential licensing, merger, and acquisition activities.

Based on indication, the market is segmented into neurological diseases, cancer, hepatological diseases, Duchenne muscular dystrophy, and other symptoms.

• The cancer segment is estimated to grow at the highest CAGR during the forecast period due to the approval of a growing number of gene therapies for cancer treatment and the rising incidence of hematologic cancers.
• The cancer segment is anticipated to hold a significant share in the market. The factors bolstering the segment growth are the increasing burden of cancer disorder, the growing focus on research to develop an effective treatment for cancer, and rising investments pertaining to cancer research.
• For instance, according to Globocan 2020, an estimated 19,292,789 new cancer cases and 9,958,133 deaths due to cancers were reported 2020 worldwide.
• In the treatment of cancer, various gene therapy strategies are currently employed. These include anti-angiogenic gene therapy, pro-drug activating suicide gene therapy, gene therapy-based immune modulation, oncolytic virotherapy, correction/compensation of gene defects, antisense, genetic manipulation of apoptotic and tumor invasion pathways, and RNAi strategies.
• The cancer types, such as brain, lung, breast, pancreatic, liver, colorectal, prostate, bladder, head and neck, skin, ovarian, and renal cancer, have been the target of these therapies.

The global gene therapy market is highly competitive and consists of a few major players. Companies like Amgen Inc., Bluebird Bio, Gilead Sciences, Inc., Novartis AG, Orchard Therapeutics, Sibiono GeneTech Co. Ltd., Spark Therapeutics (Roche AG), and UniQure N.V., among others, hold the substantial market share in the Gene Therapy market. They have various strategic alliances such as collaborations and acquisitions along with the launch of advanced products to secure their position in the global market.

In Europe, there are more than 300 biotech and pharma companies working in the gene therapy field, while there are over 600 in North America, according to GlobalData. A large number of small and medium-sized biotechs are developing gene therapies, and numerous big pharma companies are also working in the field, as mentioned earlier.

Overview of the Challenges

1) Challenges to realizing the potential of viral-vector gene therapies:

The current generation of viral-vector gene therapies represents the culmination of decades of biological and clinical research. As more patients have received these therapies, it has become clear that three fundamental challenges will restrict the applicability of viral vectors: getting past the immune system, lowering the dose, and controlling transgene expression. Ongoing work to address these challenges is generating technological innovations that have the potential to leapfrog current therapies and unlock the potential of viral vectors.

To tackle gene therapy hurdles, academic labs, start-ups, and established companies are generating various innovative solutions. Each focuses on a specific component of a gene-therapy product (for example, the viral capsid) or part of the development process (such as manufacturing). However, these creations often address considerable core challenges, outlining multiple paths to realizing the promise of viral-vector gene therapy.

Future trends:

• Viral-vector gene therapies find themselves at another inflection point. Early successes in the treatment of rare diseases and blood cancers have proven the potential of this modality, while the challenges to gaining widespread adoption—the way that monoclonal antibodies have over the past 20 years—have only become more evident. Nevertheless, the wealth of inventive solutions being explored across academia, biotech, pharma, contract development, and manufacturing organizations demonstrates that viral-vector gene therapies are here to stay.

• As described previously, different solutions are emerging to address each of the core challenges. The diversity of these approaches and the complexities of gene therapy means that no single process is likely to “win.” That situation will enable a rapid creation cycle in which gene therapies are constantly being improved upon, which will offer new opportunities to leapfrog existing products.

• Owners of viral-vector platforms will need to consistently look to the next set of innovations beyond their current platforms and assets. That could include investing directly to help overcome the broader challenges and buying or licensing critical technology to upgrade their outlets.

The manufacturing challenges:

As explained above, the early stages of gene therapy development involve continuous biophysical analyses and safety testing of the therapy’s viral and genetic components to ensure the safety and efficacy of the treatment when used in humans. However, challenges also pop up throughout different stages of the gene therapy manufacturing process.

• A big challenge manufacturers face is the compressed timelines of gene therapy development. While the average result of a conventional biological takes between eight and ten years, gene therapy development takes three to five years.

• These tight timelines also result in a number of other problems, including an increasing demand for plasmids – the critical building blocks for viral vector development – and growing bottlenecks in plasmid production; one of the reasons researchers are studying non-viral delivery methods for gene therapies

• The increasing challenge of producing viral vectors at a large scale has forced many companies to think outside the box.

Another challenge related to process development is the fact that each disease and each target tissue requires a different dosage.

• This complicates the production of standardized gene therapy development protocols.

• At the same time, the growing popularity of gene therapy means the demand is outstripping the supply of expertise and manufacturing capacity. Here, gene therapy developers advocate moving manufacturing processes towards more automation and software solutions and handing the entire process to contract manufacturing organizations.

Moreover, a lack of optimized processes and fast testing is seen as one of the main drivers of the high costs of gene therapies. To address this problem, researchers are working on the development of new analytical methods like robust, fast, easy-to-use, and reproducible assays. These should be developed only for gene therapy assessment rather than being borrowed from traditional antibody development processes, as is currently the case.

A shift in consumer behavior with impact and forthcoming legislation

The retail industry is in the process of undergoing a radical transformation, whereby sustainability has redefined consumer preferences and values and become a competitive advantage among retailers.

• By embracing sustainability, the retail industry can respond to the pressure from consumers, legislation and other stakeholders and, at the same time, make their business more profitable by attracting Millennial and Generation Z consumers, saving costs and increasing efficiencies.
• Sustainability in retail has become a prominent issue leading retail trends with its transversal relevance across a wide range of fields, such as environmental sciences, business, and social sciences, and terms such as sustainable development, asset waste, sustainable supply chain, supply chain management, and corporate social responsibility.
• In particular, the fashion industry saw the most significant changes within the retail sector, as outcries against wasteful consumption and fast fashion gave rise to an alternative model known as the circular fashion system.

Consequently, critical factors such as the spread of environmental and ethical consciousness and the related legislation had triggered a new trend for both fashion retailers and brands, namely secondhand resale services. Fashion brands are now looking into resale strategies in order to benefit from the fast-growing secondhand market.

The textile industry is in a paradigm shift due to increasing awareness and demand for more sustainable ways of producing our clothes.

• A big part of the problem is the low utilisation rate of clothes already made. This demand for more tolerable ways is rising from many fronts – consumers, authorities and legislation.
• In 2019, the second-hand market expanded 21 times faster than conventional apparel retail. Also, the second-hand clothing market is projected to more than triple in value in the next 10 years – from $ 28 billion in 2019 to $ 80 billion in 2029.
• The most considerable growth is estimated to come from new resale models, including online second-hand.

Overview of the Textile Industry

The fashion market statistics show that the apparel and textile sector is the 4th biggest globally: the industry has a labour force of 3,384.1 million. Its value is equivalent to 3 trillion dollars. That means it corresponds to 2% of the world’s Gross Domestic Product (GDP).

• Almost 75% of the world’s fashion market is concentrated in Europe, the USA, China and Japan.
• After nearly two years of disruption, the global fashion industry is once again finding its feet: Companies are adapting to new consumer priorities, and digital is providing a nexus for growth. Still, the industry faces significant challenges amid supply-chain disruption, patchy demand, and persistent pressure on the bottom line.

The fashion industry is one of the most challenging industries impacted by hundreds of factors, including economic uncertainties and digital transformation. In response to this new digital wave, consumer expectations have reached an all-time high. Shoppers are no longer content with the simple purchase transaction; they want to have an experience attached to it. For fashion brands, this means that they have to become digitally savvy to be flourishing.

Sustainability dominates consumer priorities and the fashion agenda.

• Shoppers want to know where materials come from, how products are made, and whether the people involved are treated fairly.
• In response, more and more companies are expanding their sustainable assortments and working to boost the sustainability of their supply chains.
• As part of those efforts, some are leveraging digital product passports. These can be embedded in items to support after-use activities such as resale and
• Sustainability pressure comes not only from consumers but now more and more also from legislation.

Fast fashion – the constant production of new styles at very low prices – has led to a big increase in the quantity of clothes produced and thrown away. This impact is often felt in third countries, where most production takes place. The production of raw materials, fabrics and dyeing require enormous amounts of water and chemicals, including pesticides for growing raw materials such as cotton. Consumer use also has a large environmental footprint due to the water, energy and chemicals used in washing, tumble drying and ironing, as well as to microplastics shed into the environment.

It is estimated that the fashion industry is responsible for 10% of global carbon emissions. That is more than international flights and maritime shipping combined.

Used clothes mostly end up in landfills. Various ways to address these issues have been proposed, including developing new business models for clothing rental, designing products in a way that would make re-use and recycling easier, convincing consumers to buy fewer clothes of better quality, and steering consumer behaviour towards choosing more sustainable options.

Sales of fashionable clothing and goods, as well as related services represent approximately the overall so-called Fast Fashion Market.

• Fast fashion refers to items that are quickly transitioned from the runway to the store in order to keep up with the latest trends.
• Fast fashion is defined as the supply of the most recent runway trends at a low cost of production and little upkeep, making it accessible to the general public. To put it another way, fast fashion refers to the capacity to catch the most recent fashion trends and convey them to people in the same amount of time as fast food.
• Fast fashion has risen from out-of-the-box thinking that departs from convention, which includes a shift from planned production to quick response production, a transition from local business to global business, a change from following trends to leading trends, and a shift from media-centric marketing to spatial marketing. The major advantages of fast fashion are short production time, more styles, and lower quantities. The disadvantages are an imitation of original products and false price notion.

The global fast fashion market is relatively fragmented, with a large number of small players. The top ten competitors in that space made up 29.13% of the total market in 2020. Notable players include Inditex (Zara SA), H&M Group, Fast Retailing (Uniqlo), The Gap, Inc., and ASOS Plc.

However, and more than ever, sustainability dominates consumer priorities and the fashion agenda.

Sustainability Challenge of the Textile Industry

Ecological impact:

• A 2021 report from the World Economic Forum identified fashion, and its supply chain, as the planet’s third-largest polluter (after food and construction).
• United Nations Climate Change News states that the fashion industry contributes around 10% of global greenhouse gas emissions due to its extended supply chains and energy-intensive production, more than all international flights and maritime shipping combined.

In terms of waste and recycling:

• Single-use outfits generated 208M lbs. of waste in 2019.
• 1 in 2 people are throwing their unwanted clothes straight in the trash. The result? 64% of the 32B garments produced each year end up in the landfill.
• The Environmental Protection Agency reports that Americans generate 16 million tons of textile waste a year, equalling just over six per cent of total municipal waste (for context, plastics make up 13 per cent of America’s waste stream).
• Between 2000 and 2014, clothing production doubled, with the average consumer buying 60 per cent more pieces of garment compared to 15 years ago. Yet, each clothing item is now kept half as long.
• The fashion industry produces nearly 20% of global wastewater.
• According to Green America, textile dyeing is the second-largest water polluter globally.
• The textile industry is one of China’s top 3 water-wasting industries, discharging over 2.5 billion tons of wastewater every year.
• 43 million tons of chemicals are used to dye and treat our clothes every year, AND there are 8,000 different chemicals used to manufacture clothing.
• Cotton farming is responsible for 24% of insecticides and 11% of pesticides, despite using only 3% of the world’s arable land.
• More than USD 500 billion of value is lost every year due to clothing underutilisation and the lack of recycling.
• Consumers throw away shoes and clothing (versus recycle), an average of 70 pounds per person, annually.
• Up to 95% of the textiles that are landfilled each year could be recycled.

Growth of the Secondhand Market

Since 1996, the amount of clothes bought in the EU per person has increased by 40% following a sharp fall in prices, which has reduced the life span of clothing. The way people get rid of unwanted clothes has changed, with items being thrown away rather than donated. Europeans use nearly 26 kilos of textiles and discard about 11 kilos of them every year. Used clothes are mostly (87%) incinerated or landfilled.

Recent studies indicate that the most efficient way to minimise the environmental impact of the textile industry is to increase the number of times each garment is used. This has led to the promotion of circular economies and the secondhand market.

In 2019, secondhand market expanded 21 times faster than conventional apparel retail. Furthermore, the global secondhand clothing market is projected to grow 127% in just 5 years. The biggest growth is estimated to come from new resale models including online secondhand.

• Consumers have become increasingly interested in eco-friendly clothing options. Focus on sustainability, and a higher degree of consciousness have propelled the second-hand apparel market growth.
• Customers and companies are becoming aware of the need for fashion renovation, with consumers expecting transparent procedures.

Fast fashion, which contributes to pollution, climate change, and unethical labour practices, has given way to the sustainable fashion movement.

Consumer demands, circular economies and online marketplaces are driving the growth of the second-hand market. This has led to an increased monetary value of secondhand items – good quality clothes are no longer considered as trash.

Legislation as a New Driver

Legislation is starting to put more and more of the pressure on textile industry. In March 2022, EU Commission launched a new Circular Economy action plan.

The Action Plan presents new initiatives along the entire life cycle of products in order to modernise and transform economy while protecting the environment. It is driven by the ambition to make sustainable products that last and to enable our citizens to take full part in the circular economy. Driving new business models will boost sorting, reuse and recycling of textiles, and allow consumers to choose sustainable textiles. Ecodesign will apply to a broader range of products: clothes will be made to last longer.

The Commission also presented a new strategy to make textiles more durable, repairable, reusable and recyclable, to tackle fast fashion, textile waste and the destruction of unsold textiles, and ensure their production takes place in full respect of social rights.

• “By 2030 textile products placed on the EU market are long-lived and recyclable, to a great extent made of recycled fibres, free of hazardous substances and produced in respect of social rights and the environment. Consumers benefit longer from high quality affordable textiles, fast fashion is out of fashion, and economically profitable re-use and repair services are widely available. In a competitive, resilient and innovative textiles sector, producers take responsibility for their products along the value chain, including when they become waste. The circular textiles ecosystem is thriving, driven by sufficient capacities for innovative fibre-to-fibre recycling, while the incineration and landfilling of textiles is reduced to the minimum.”

The “Resale” market – a Blue-Ocean opportunity

As consumers become increasingly concerned by the environmental impact of clothes production, transportation, and waste (greenhouse gas emissions, water consumption, landfills), many increase their second-hand consumption to limit their carbon footprint.

Resale platforms especially drive the second-hand market boom.

• These digital resale marketplaces – such as Depop, Vinted, Vestiaire Collective, ThredUP or the RealReal – connect consumers with no intermediary; hence they are called a “C2C (consumer-to-consumer) model”.

They are expected to go from $15 billion in 2021 to $47 billion in 2025 in the US only.

And the leading marketplaces have raised hundreds of millions of dollars in just a decade: Vestiaire Collective raised $ 240 million, The RealReal $ 357 million, Vinted 260 million, Depop $105 and ThredUP $ 305 million.

Until now, the second-hand market has almost entirely been running outside the fashion industry and its core brands.

• The labels have not had any control of the market, nor have they had any revenues from this demand.
• This is now rapidly changing as new resale services are being founded mainly in the US and Europe (second hand as such is only starting to pick up in Asia so that market will follow but is maybe 2-3 years behind the US and Europe).

As the second-hand trend is becoming more mainstream, it has drawn the attention of traditional brands.

• Whether it be clothes donations, thrift stores or digital resale marketplaces: a diversity of models are emerging to answer new demand for a more impactful offer.

More and more brands are creating new concepts to include second-hand alternatives on top of their traditional offer. In that respect, 60% of fashion retailers have presented or are open to providing second-hand to their customers.

• For instance, Levi’s launched its own second-hand website, “Seconhand Levi”; likewise, Aigle launched its resale website “Second Souffle” and Decathlon “Seconde Vie”, Nike created a new service dedicated to second-handcalled “Refurbished”.
• Other brands are opting for partnerships to encourage customers to turn to second-hand, as the BCG study points out that 62% of respondents say they are more likely to purchase from brands that partner with second-hand actors. For instance, Stella McCartney partnered with The RealReal in 2018 and offered $100 vouchers to customers buying Stella McCartney through The RealReal.
• More and more consumers are interested, when buying new, in the expected second-hand value of the garment. Several consumers are curious whether the supplier offers recycling services.
• Bain & Co have forecasted that by 2030 more than 30% of the major fashion brands’ earnings would come from second-hand sales. LVMH’s brand new sustainability strategy states that, also by 2030, 25% of its profits will come from circular business.

Thanks to new and innovative business and earning models, the fashion industry is moving into more sustainable practices. The circular solution developed allows fashion brands to benefit from the rising value of secondhand garments.

• The following 10 years will see the resale market grow much quicker than traditional retail, with second-hand clothing expected to be twice the size of fast fashion by 2030.
• The data suggests that second-hand fashion is also growing faster than sustainable fashion, with consumers turning to resale, which has partly happened due to the emergence of different easier-to-use resale sites, making it more straightforward and appealing for consumers to both sell and buy second-hand goods.
• This has happened quite dramatically over the past 12 months: 118 million consumers have tried reselling for the first time in 2021, compared with just 36.2 million first-time sellers in 2020.

Market Overview

Revenues for online businesses, publishers and/or websites are hugely dependent on advertising spending. But digital advertising can become quickly very expensive, while other methodologies can achieve the same purpose – selling more, like for example, “content marketing”.

What is content marketing?

In general, content marketing is a marketing technique that involves creating and spreading contents valuable from the point of view of recipients of the content, aimed at drawing attention and engaging a community gathered around a particular target group. Content is what users want to read, learn about, watch or experience. From the perspective of business, content is important information presented on a website, in an application, or by other available channels of digital presentation, which have the mission of communicating.

Nowadays, content marketing is not just a desirable thing; it’s a must-have. Moreover, it is necessary to create up-to-date content.

• Content marketing creates value and helps people. It answers questions and provides essential, basic information.
• This, in turn, leads to a situation in which the recipient, consumer, is educated and informed enough to make a decision concerning a potential purchase, or thanks to having this information, he can recommend the purchase to his friends, family or superiors.

Overview of the Digital Marketing Sector

The world of media is changing rapidly, and long-term beliefs about value sources in a given business model, media segment, or geography are also evolving. Spending on media continues to shift from traditional to digital products and services. By the end of the year, experts believe digital spending will account for 60% of overall media spend. Digital, consisting of Internet- and mobile advertising, will become the largest advertising category in the coming years (surpassing TV), and mobile will more than double its share of the digital ad market.

In 2020 advertising spending continued to rise globally, with digital driving most of the growth with an increase of 17.6% YoY to $ 333 billion.

Specifically, in the US, digital ad spends will increase by 19.1% to $130 billion, while traditional advertising will fall 19% to $110 billion. That means digital will account for 54.2% of the total, while traditional will only represent 45.8%. The gap between digital and traditional will continue to widen, and by 2023 digital will account for more than two-thirds of total ad spending.

While digital ad spending will rise, data also shows two key trends:

• Digital ad spending growth rates are weaker than they were in 2018 and are projected to decrease year on year, down to 8% in 2023.
• Most digital ad money is going worldwide to only four players: Google, Facebook, Alibaba and Amazon.
• The decreasing impact of ads on consumers pushes businesses to invest more in less aggressive strategies, such as branded content and useful content spread through paid ad campaigns in search engines, social networks and print and digital media.

Google remained the most significant digital ad seller in the world in 2021, accounting for approx. 31.1% of worldwide ad spending ($103 billion). Facebook will be No. 2 ($67 billion), followed by China-based Alibaba ($29 billion). Google and Facebook alone commanded 90% of the growth in digital ad sales last year in the US. Amazon has been steadily chipping away at the Google-Facebook duopoly in the US, but it will be a smaller player on the global stage ($14 billion), although that still makes it the fourth-largest digital ad seller worldwide.

The Facebook-Google duopoly is even greater in the UK. Their combined share of the digital ad market will reach 63.3%, higher than their US share (59.3%).

Conclusion:

The advertising industry is at a critical juncture in developing digital advertising technologies driven by the emergence of key technology platforms.

Overview of the eCommerce Sector

In 2019 retail e-commerce sales worldwide amounted to 3.4 trillion US dollars, and e-retail revenues are projected to grow to 4.8 trillion US dollars in 2021. Desktop PCs are still the most popular device for placing online shopping orders, but mobile devices, especially smartphones, are catching up.

The confluence of new technologies, new entrants and new consumer demands has catapulted retail into a state of flux. These market shifts influence not only how shoppers choose to obtain their desired goods and services but also how and where they spend their money.

Consumers are increasingly turning to online and mobile channels to make purchases that they traditionally would have made at the cash wrap in years past. This deflection of spending has been fuelled, in part, by the rise of online marketplaces and the on-demand economy against the backdrop of new purchase experiences like click-and-collect and mobile order-ahead.

• One out of every ten dollars spent globally this year will be spent online.
• Consumers are increasingly turning to online and mobile channels to make purchases that they traditionally would have made in-store in prior years, thanks to new online purchasing experiences like click-and-collect and mobile order-ahead. According to a forecast (451 Research), online commerce will continue to expand with speed through 2022, growing at more than six times the in-store sales rate and cresting $5.8 trillion.
• By 2020, the number of m-commerce transactions eclipsed the number of e-commerce transactions globally. Mobile has already become the primary computing platform for the world’s population, and next year it will become the top digital commerce platform for consumers around the globe. Mobile will increasingly be the first, and often the only, touchpoint retailers will have with a shopper.

Looking ahead, businesses of all types – and especially those primarily operating in the brick & mortar realm today – must adopt the necessary strategies to meet their customers at the myriad digital touchpoints where they are increasingly looking to conduct commerce. With digital commerce growing more than six times the rate of in-store sales through 2022, it’s more than apparent that a well-executed digital transformation strategy will be a hallmark of long-term, sustainable growth in commerce.

Conclusion:

To increase their profit margins and extend their geographic presence, vendors are making investments in planning, designing, and developing new marketing techniques and acquiring new disruptive technology players. E-commerce is growing nearly 20% YoY and provides an opportunity for websites to capture part of this expanding revenue flow.

The double-digit YoY growth of e-commerce worldwide offers publishers a fantastic opportunity to create a new and stable revenue flow that goes beyond traditional advertising.

• Content -complete, original and attractive product descriptions- is basic for e-commerce companies to compete in the online market, since they are essential for their positioning in Google and for the conversion of visits into sales.

The “Content Marketing” Channel opportunity

Innovation is a constant force driving the evolution of the digital media ecosystem. Digital channels are expected to provide nearly all incremental spend flowing into global marketing budgets through 2021.

Content marketing is a form of marketing that focuses on creating, publishing, and distributing content online for a target audience. It is often used by businesses to: Attract attention and generate potential customers to expand customer base generation or increase online sales. Increase brand awareness or credibility to attract online users. Community content marketing attracts potential customers by creating and sharing valuable free content. Turn potential customers into customers.

Content marketing has exploded in the last few years. According to analysts from Technavio, the industry is projected to be worth $ 413 billion by the end of 2021.

• From 2016 to 2021, global industry value climbed by $ 217.3 billion thanks to a 16% compound annual growth rate.
• Content marketing costs less than traditional advertising.
• More content marketers are focusing on building trust with content, focusing on the audience versus their brand. Conversion rates are better thanks to established trust.
• Content marketing effectively builds brand awareness, which helps businesses grow their reach.
• The main USPs of this channel are cost-effectiveness, better conversion rates, and brand growth!

The Future of Marketing is Content Marketing. Why?

• In many ways, the beginning of the digital content marketing era was experimental. Businesses were figuring out what worked and what didn’t. All the while, search engine algorithms were constantly changing the way content was optimized and discovered.
  1. In fact, it’s only in the last few years that businesses started understanding the need for Content strategy; Tracking and measuring the effectiveness of their content, understanding the resulting ROI.
  2. In 2010, when Content Marketing Institute released their first Benchmarks, Budgets, & Trends Report for B2Bs, the biggest content marketing challenges reported were producing engaging content (36%) and producing enough content (21%).
  3. Fast-forward to the 2019 report, and the results are very different. Today, content marketers’ biggest challenges are changes in the SEO/search algorithms (61%), closely followed by social media algorithms‘ changes (45%). That’s a giant leap. The issue is no longer what to produce but rather how to keep up with the changing search landscape.
  4. In short, the industry is generally more successful at content than it was 10 years ago – and that’s a significant contributor to the industry’s current boom.

Businesses are seeing the value of content and investing

a.     It’s a slow journey to see returns from content marketing. It takes months to gain traction, climb the search engine rankings, and begin building authority.

b.     In the early days, lots of brands didn’t wait long enough to see the promised results. Others couldn’t see the value in content, mainly because adopters weren’t sure how to prove ROI.

c.      However nowadays, the benefits start coming into focus. We can measure content marketing and point to concrete numbers that show exactly why it’s an excellent investment. As a result, more businesses are investing.

d.     Proof of that can be seen, for example, in the global content marketing software market. From 2018 to 2023, it’s expected to enjoy a compound annual growth rate of 18.4%. It should surge from $ 4 billion in 2018 to $ 10 billion in 2023 (According to GlobeNewswire).

Content Marketing aligns with modern buyer Preferences and needs

a.     One of the main reasons content marketing is enjoying explosive growth is a simple fact: Modern consumers are using the Internet for almost everything, including news and information, entertainment, communication, education, shopping.

b.     In particular, when it comes to shopping, today’s consumers aren’t limiting themselves to special purchases or certain types of goods. They’re buying everything you can think of, including consumer packaged goods like non-perishable grocery items, beauty products, and personal care products. According to a 2018 Periscope by McKinsey survey, 70% of respondents shop this way. Of course, their purchase decisions are affected by the Internet, too. Consumers now have the means to thoroughly research products, share their shopping experiences with a broad audience, and generally take more control over how and what they buy.

c.      Combine these points with the fact that most online activity begins with a search, and you’ll start to see why content marketing fits in so neatly. Consumers are savvier than ever before, and their buying journeys are more complicated. They can smell a sleazy sales pitch from miles away. They know when brands are being genuine and when they’re just grabbing for money.

d.     That’s why they respond so well to the non-sales approach of content marketing. Content provides value. Content answers questions and addresses pain points. Content builds trust and loyalty and creates customer-brand relationships.

e.     The amazing part is brands are now seeing that meeting customers at the door of their search with valuable content works far better than trumpeting cold ads in their face. The cold ad approach is dying because customers are not responding the same ways they used to.

What are the trends:

• B2B content format trends: Marketers are ramping up their traditional written content, such as blog articles and eBooks (61%). Surprisingly, investments in creating podcasts have mostly remained static in the past year.
• B2C content format trends: Similar to the B2B space, B2C marketers are also increasing their creation of written content — even at higher rates than B2B marketers (64% vs 61%). B2C and B2B marketers differ in the usage of social media stories as a defined content category. 69% of B2C marketers are using storytelling via social media as a content format versus just 37% of B2B marketers.
• Investment trends: Half of B2B marketers are increasing their content marketing budgets in 2019. 40% don’t measure ROI, and an additional 11% are “unsure”. 57% of B2C marketers are increasing their content marketing budgets in 2019. On the other hand, 57% don’t measure ROI at all. Another 11% are either unsure if they measure or are unclear on how to.

Content Marketing, “the most economical and effective”

The marketing specialist website The Drum recently collected some statements by Ujjwal Doshi, lead analyst at Technavio for media and entertainment: “Content marketing is the most economical and effective means of building brand awareness among consumers. If an audience can rely on a company for information, then they will most likely buy products from the same company. ”

According to this source, sponsored content has taken off as advertisers seek new ways to skirt ad blocking software while delivering tangential benefits in terms of improving search engine optimization, social media followings and PR.

80% of marketers outsource content

The latest Content Marketing Institute (CMI) report highlights that 59% of marketers expect their content marketing budget to increase this year, and eight out of ten marketing managers declare that they outsource content production. Not only can it make financial sense in the short term, but it drives greater long-term ROI by giving the people (and therefore Google) what they want.

The Future of Marketing is Content Marketing

• Companies rate their content marketing as more successful (74% B2C, 70% B2B) than it was the year prior, a trend that continues to inch upward.

Conclusion:

Digital Marketing is now mainstream. Digital Marketing Technology has emerged as one of the most exciting beneficiaries of recent advances in bandwidth, mobile computing, networking and cloud delivery technologies. From content creation to the actual ad impression, the Digital Marketing ecosystem is teeming with a vibrant community of participants, all involved in a rush to market ahead of their competitors and the more prominent established players. The acceleration in the growth of spending on digital media-based strategies has created attractive investment opportunities from startups through IPOs with significant M&A opportunities along the way.

The market for digital marketing remains one of the highest growth opportunities. The technology infrastructure and marketing expertise required to deliver this solution are significant in capability and sprawling in scope. Companies in all sectors, especially those with more competition on the Internet, are looking for alternative strategies that are more profitable in the long term and with greater customer engagement. Content marketing is gaining ground as one of the most effective ways to reach and retain customers without using aggressive sales tactics.

Among the growth factors of the sector will be:

1) The adoption of powerful content policies by businesses to generate engagement, personalization and generate interest.

2) The cost of Content Marketing is lower than traditional advertising in the long run.

3) Social media will continue to grow strongly in the coming years.

4) Consumers are migrating from conventional shopping channels to digital ones.

Market Overview

Proving one’s identity is clearly critical to participation in societal, political, economic, even cultural life. Trust is a precious commodity earned over time and challenging to build between consumers and businesses in an online world. This requires businesses to apply the right tools and relevant information to identify them. Unlike face-to-face encounters, digital interactions lack the visual cues that normally builds trust. As digital interactions seem anonymous businesses and consumers must find ways to establish mutual trust.

Digital commerce is expected to grow globally at 20% CAGR by 2022, reaching nearly $ 6 trillion in value and digital banking users (online and mobile) exceeded 2 billion in 2018 with an expected 11% CAGR (2019-2023), where mobile banking users are expected to be 58% of the global banked population in 2020. That means it is imperative that businesses build meaningful digital customer relationships based on trust. What does it take to build trust online? Practically speaking, it is about maximizing both security and convenience.

There are some important differences and similarities between authentication and digital identification, which need to be outlined to understand the markets.

Identity verification – Identification is the method to prove we are who we say we are. This is different from identity, which is a person’s unique group of characteristics. Identification is the method to authenticate identity.

• Today, varied forms of identification methods are used to prove identity. Electronic ID Verification companies (eIDV) stand for a significant part of the ID verification solutions on the market.
• The identity verification market size is expected to grow from $ 7.6 billion in 2020 to $ 15.8 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 15.6% during the forecast period (Markets and Markets).

Authentication – Authentication is the extension of the first identity verification in a user’s onboarding. Once the user’s identity has been verified, the user authenticates themselves to make the purchase, get the loan, or open an account.

Digital Identity and Digital Identification

A trusted digital identity is a set of verified attributes that provide an authenticated link between a person and their unique digital identity. These attributes can be biometrics, identification documents, or third-party verification procedures, among others. A trusted digital ID is usually created in three steps: capturing verified attributes, verifying the records, and digitizing the ID.

The World at a glance

Proving one’s identity is clearly critical to participation in societal, political, economic, even cultural life. Still, more than a billion people in low-income economies lack any formally recognized ID – either paper or electronic – negatively impacting underprivileged groups in Africa and Asia. A digital identity presents a life-changing solution opening up for access to retirement and unemployment benefits, education, healthcare, voting, and more.

Financial institutions

Digital ID could give access to financial services for 1.7 billion-plus world citizens who are presently financially excluded, according to the World Bank (2020). In contrast, millions of consumers open new accounts daily in the digitally connected parts of the World, with online stores, telecom, streaming services, ridesharing apps, and, naturally, banks.

Opening a bank account includes time-consuming and complex KYC (Know Your Customer) checks and repeated identity verification throughout the entire client life cycle. KYC help identify money launderers, tax fraud, and other criminal activities.  With the entry of PSD2 and customer convenience demands, physical, face-to-face identity verification methods are no longer rational; they slow down onboarding, frustrate pressed-for-time customers, leave room for human error, and are hard to scale. Digital identity verification is the logical approach, accelerating the entire process, opening up access, and eliminating barriers like time, geography, and cost. Mobile banking users are expected to be 58% of the global banked population in 2020.

The covid-19 pandemic effect on online banking

The no-contact, quarantined pandemic has pushed a global shift towards digital transactions, speeding up trends already in place. Consumers firmly demand digital transactions, and banks and businesses must find ways to build trust in a Covid-stricken world.

(Deloitte Digital, October 2020)

State and government

Besides security for both nations and citizens, well-implemented digital ID programs can provide individuals and businesses with access to the entire set of governmental services. Creating a trust framework for digital ID is therefore high on every government’s to-do list. In many connected countries, like Sweden, Belgium, Estonia, Finland, and more, a national mobile digital ID, valid for both physical and digital realms, is already a reality for millions. Sweden stands out as it has raised the bar very high in digital identity verification and authentication. Most Swedes use their smartphone to identify themselves over the internet without ever having to show a physical ID. Instead, authentication is done with the trusted mobile identification solution Mobilt BankID, which today is the Swedish national standard for mobile and online digital identification with a 98% adoption rate and 8 million users. Mobilt BankID is also recognized by the Swedish government.

Commerce

In-app purchasing, person-to-person payments, and e-wallets result from consumers’ relentless demand for instant access to their money. This is why the most convenient and readily available device of them all – the smartphone – is the payment channel of choice. Sending money to friends and family, shopping, or doing day-to-day things like paying a bill inside various apps are examples of consumer behaviours taking off phenomenally. In doing this, today’s consumers also expect a seamless customer experience. So, for merchants, customer enrolment is all about the balance between security and customer experience.

A complex ID verification/authentication process will turn customers away. A well-designed digital identification/authentication method, on the other hand, allows businesses to doubtlessly know their customers while providing enhanced security, greater scalability, better user experience, and regulatory compliance. Moreover, digital ID verification boosts efficiency and lowers the costs of handling customer credentials.

• The global Post-COVID-19 Identity Verification Market Size is forecasted to grow from USD 7.6 Billion in 2020 to USD 15.8 Billion by 2025, at a Compound Annual Growth Rate (CAGR) of 15.6% during 2020-2025 (Research & Markets).
• The major growth drivers for the market include increasing digitization initiatives, increasing fraudulent activities and identity theft during the last decade, and Increasing use cases of digital identities among verticals.

The arena for digital identification has risen due to recent years’ demand for greater security and data privacy, in line with the growth of digital services Worldwide. The market is fragmented and diverse, and a clear definition of what constitutes a digital identity – which can be presented with a digital ID – is yet to be determined.

To evaluate the Identity Verification market, it’s necessary to add a dimension beyond the number and type of digital ID providers, and it’s the kind of authorizing source(s) the digital IDs use for identity proofing:

• Centralized ID – Centralized IDs are stored in large databases that are vulnerable without adequate protection. Peoples’ identification information might be stolen, shared without consent, abused, or lost. Used widely today to fulfil AML and KYC regulations.
• Federated ID – Often pushed by banks. Federated identity only handles authentication – all the other identity components are still based on the centralized model. Used widely today to fulfil AML and KYC regulations.
• Decentralized ID – The decentralized ID is stored in a place that the individual fully controls (the device). It is unique, cryptographically strong, private, and portable. The decentralized ID can be accessed without a middleman. Sometimes called “good identity. Does not yet fulfil AML and KYC regulations.

Multifactor Authentication

Multifactor authentication is recognized worldwide as the most secure method to on-board new customers to services that demand strong customer authentication (SCA). In addition, it assists in compliance with strict regulations such as the Anti-Money Laundering (AML) Directive and PSD2 in Europe.

Today countless vendors are claiming to offer multifactor authentication (MFA) solutions. However, they still have security flaws – primarily as they still depend on passwords or other authentication tokens.

What has been considered the most secure form of authentication is password-less. Password-less authentication emerged as a type of MFA that replaces the password with a safer alternative, like biometrics or PIN codes. This form of authentication requires two or more verification factors that are secured with a cryptographic key pair.

Besides the technological security solution, multifactor authentication tends to rely entirely on user experience as the main driver and primary competitive advantage.

Overview of fraud and cyber threats

The ease of online shopping, peer-to-peer money transfers, and seamless payment systems makes identity the new treasure trove when it comes to cybercrime. Cybercriminals hijack identities and grab credentials in numerous ways: skimming’s, phishing, malware, and significant, brute force data breaches, to name a few. As data is everywhere, the avalanche of digital services has created numerous customer touchpoints and a long tail of micro-moments that widens the attack surface, and where each one poses a possible entry point for an attacker. Cybercriminals know that businesses, in many cases, rely on weak passwords, SMS or email link confirmation, or One Time Passwords (OTP) to authenticate their users – all of which are very easy to crack, hack, and steal. Data that’s been stolen ends up on the dark web – a part of the deep web – a hidden part of the internet that is not indexed or accessible by search engines. The dark web is where cybercriminals buy and sell malware and cyberattack services, which they use to assault unsuspecting victims, businesses, governments, and individuals.

The FBI has estimated the size of the deep web at as much as 5,000 times larger than the “surface web,” and growing at an inconceivable rate. So, there is a considerable gap between the amount of data being produced today that needs security and the amount of data that is actually being secured, and this gap will broaden as a consequence of all things digital. Nearly 90 percent of all data created in the global data sphere will require some level of security by 2025 (Data age 2025: The evolution of data to life-critical, Seagate, March 2017). Once an identity is stolen, an impostor can pose as the actual customer, using their standing and track record to open new accounts, take loans, or use a person’s credit cards to make unauthorized transactions. More than 2 in 5 consumers worldwide have already experienced a fraudulent event online at some point in their lives, with the highest incidence occurring in the United States, closely followed by the UK and the lowest in the European, Middle East, and Africa region.

Another downside is that identity theft, and account takeovers are increasingly threatening businesses. Besides substantial financial losses on both sides, account takeovers, data leaks, and credit card fraud can tear banks’, public entities’, and merchants’ reputations apart. Many reports are stating multi-billion-dollar costs after an actual cyberattack and the gruesome costs for preventing them. In a widely cited estimate by The World Bank, institutions lose nearly three dollars once associated costs are added to the fraud loss itself for every dollar of fraud.

• Companies are expected to spend over $1 trillion over the next five years in cybersecurity for PCs, mobile devices, and the Internet of Things (IoT) devices (WEForum).
• An estimated $113 billion will be spent on protecting mobile devices alone (BI).
• The estimated costs for criminal data breaches will be more than USD 8 trillion over the next five years (Juniper Research).
• Personal credentials stolen by cybercriminals will reach USD 5 billion by 2020.

Estimated global losses from cybercrime are projected to hit just under a record $1 trillion for 2020 as the coronavirus pandemic provided new opportunities for hackers to target consumers and businesses (Center for Strategic and International Studies).

The Identity, Authentication and Fraud Solutions opportunity

The digital-ID opportunity grows as costs drop, technology improves, and access to the internet and smartphones goes up. The digital infrastructure that supports digital ID grows in range and decreases in cost daily. As usernames and passwords are no longer secure, even forbidden for banks as a method of authentication according to PSD2 new security approaches are needed.

The market for Identity, Authentication and Fraud Solutions will reach 28 billion dollars by 2023 and identification will be an increasingly important component of that market. (BCG Research and analysis).

• While compromised credentials cause 81% of data breaches, identity and access management represents only 8.5% of security budgets. (Bright TALK).
• One of the critical functions of a government is to collect and archive national records. This includes everything from property records and registers of births, deaths and taxes, to Parliamentary proceedings.
• Protecting digital identity, gaining data visibility and protecting employees are indispensable challenges for the years ahead, according to the 2018 security predictions report by security firm FireEye.

Market trends:

Drivers and opportunity: Increasing digitalization with initiatives, such as eID and intelligent infrastructure.

• The digitalization of the world has brought so many identity-related frauds to light and urged businesses to take stringent measures for securing them. With increasing digitalization across governments and private sectors worldwide, identity verification has become a vital component where verified identity is mandatory, such as border controls and digital services’ access. With initiatives across countries, such as electronic ID cards (eID), smart border control that uses facial recognition for identity verification and authentication, and smart cities and intelligent airports where video analytics and liveness detection is used for ID verification, secure identity verification has become a crucial part of online security in these areas.
• The leading drivers for authentication and authorization technologies can be grouped into three high-level categories. First, there is no argument about the reality or impact of the trend towards expanding access to information through the ever-increasing numbers of mobile workers and telecommuters and the extension of the enterprise network to customers and business partners. The need for portable authentication credentials is increasing, simultaneously with an exponential increase in the size and complexity of our networks. Second, the volume of sensitive and high-value information accessed remotely continues to rise, and where there is value, there are people who will try to obtain it — called the Willy.
• The pricing of identity verification solutions and services is decided on the basis of a few factors, such as price per verification, linguistics, data storage, and technical support.
• BFSI vertical to hold the largest market size during the forecast period: The increased digitization of banking processes, such as digital on-boarding and digital payments aimed toward improving the customer experience, are also driving the need for identity verification around the globe.

North America to hold the largest market size during the forecast period: North America is expected to contribute the highest market share in terms of revenues during the forecast period as it is a technologically advanced region with an increased number of early adopters and the presence of significant market players. Factors such as the development of government initiatives, like intelligent infrastructure, smart cities, digital identity-based driver’s license and increasing integration of various technologies, such as AI, ML, and blockchain, for securing digital identities are suspected of driving the demand for identity verification market.

Asia Pacific is expected to contribute to the fastest-growing region with the highest CAGR during the forecast period as it is getting equipped with the early adoption of new technologies. The government takes factors such as Initiatives towards tackling identity-related frauds, mainly for strengthening eKYC to verify identities, such as compliance regulations initiated by countries, increasing demand for cloud-based identity verification, and increasing identity-related cyber-attacks are driving the revenue growth in this region.

• The largest and fastest-growing region globally with a population of 4.5 billion people. (China, India and South-East Asia). According to a report by Oxford Economics, all 10 of the world’s fastest-growing cities across the globe from next year through to 2035 will be in India.
• Asian economies are well positioned for robust growth, with GDPs expected to rise by an average of 6.3 % in the following years. Emerging markets in Asia are also the best performers in economic growth in recent years, especially when compared with emerging markets outside of Asia.
• More than 1 billion people within the region still have no access to formal financial services meaning, no formal employment, no bank account, no meaningful ability to engage in commerce online or offline.
• By some estimates, only 27% of adults have a bank account, and only 33% of companies have a loan or line of credit.

Conclusion:

Established identity solutions providers and startups alike are building capabilities and pursuing patents and acquisitions. In 2017, there were 226 identity deals funded via the private equity market, according to CB Insights, up from 123 in 2012. Yet even with all the investment and interest, the market still lacks a clear leader.

Below are three significant challenges to explain why this is the case:

• Different products and services place unwanted burdens on consumers. Current solutions ask users to play an active role in protecting and verifying their identity.
• Providers use identifying data in a suboptimal way. In the offline world, certain mainstay types of data, including driver’s licenses, passports, social security or tax ID numbers, credit histories, and knowledge-based questions, have long been used to verify identities.
• Providers lack cutting-edge technology or aren’t able to use it effectively. Artificial intelligence and machine learning can significantly simplify and crucially automate identity authentication.

The market presents a paradox. The startups that have promising technology often don’t have sufficient scale, while the established players that do have the necessary scale frequently don’t have the innovative technology. Either way, compelling advances in identity authentication aren’t utilized to their full potential.

Market Overview

The investment migration market has grown from $ 2.9 billion in 2011 to $ 21.4 billion today.

• The industry is set to double in size over three years.
• Demand for Residency and Citizenship-by-Investment programs (RCBI) from international private clients is estimated to be growing by over 20% per year.

Before selecting an investment location, investors should consider the outcome of their investment (residency or citizenship), the type of investment required, processing times, any long-term commitments demanded by the program and any restrictions on dual nationality.

According to the 2021 Investment Migration Executive Survey, interest in Residency and Citizenship-by-Investment has increased significantly since the start of the Covid pandemic.

The pandemic has undoubtedly acted as a driver of growth, putting a spotlight on the many benefits of strategic residence and citizenship planning.

Overview of the Investment Migration Industry

At no other time in our history has humanity been as mobile as we are today.

• According to the International Air Transportation Association, the number of airline passengers that have flown in 2019 was 4.5 billion passengers.
• A typical person moves, on average, 12 times during their lifetime. Increasingly, these moves are occurring outside of one’s place of birth.
• More than 250 million people now live and work outside the countries in which they were born.
• There are now almost 47m dollar millionaires in the world:
  • Including over 18.6m Americans, 4.2m Chinese, 3m Japanese, 2.2m Brits and 2.1m Germans.
  • The wealthy are acquiring alternative residency and citizenship like never before – worldwide.

There are three main propositions in the RCBI marketplace:

Reasons for alternative Residency or Citizenship:

Impact of COVID-19 on this Sector

Who would have thought at the turn of 2020 that an invisible virus would become the story of the year, killing hundreds of thousands within six months and placing the global economy in a coma? Borders have proliferated within Europe to a degree unmatched even during the so-called refugee crisis. Two-thirds of the world’s fleet of airplanes have been grounded as passenger air traffic has fallen to rates last seen half a century ago.

When it comes to investment migration, the pandemic has underscored the critical differences between citizenship-by-investment and residency-by-investment, so often treated together, as well as the distinction between citizenship and mere passports. It also raises questions about how supply and demand will transform in this unusual market.

What does the pandemic mean for millionaire mobility through investment migration?

Microstates in the Caribbean will become ever more dependent on citizenship-by-investment (CBI) as a revenue source until such time as tourism, their economic mainstay, makes a comeback. Even economically more robust and more diversified economies, such as Malta, where CBI is a smaller proportion of government revenue, the allure will remain as other parts of the economy contract.

The supply side of the market will remain strong, if not expand. The crucial question is where? The most recent entrants in the market have been more sizeable states than its mini pioneers, with the UAE and Turkey now attracting investor citizens, and Egypt in the waiting room now that it has passed a law to facilitate investor naturalization.

The key issues that emerge concern what naturalization offers and how these rights are secured.

• Traditionally, demand for citizenship-by-investment has turned on what the status secures outside the granting state, principally (a) in terms of visa-free mobility, but also (b) rights to residency and settlement in a country or block of countries (such as the EU), thereby providing an “insurance policy” and (c) access to business and education opportunities. Of these, COVID-19 has highlighted how fragile the mobility aspect can be. The current fence of travel bans is part of the reason. More significant are the quarantines, a far greater concern, for countries will continue to screen entrants for temperatures for much longer and require those with fevers or testing positive to self-isolate. A quick trip abroad is simply not worth the risk of losing weeks in confinement.
• The “one percent” – in US terms, families with incomes above $420,000 – is an extraordinarily mobile set, especially at its upper end. But those without access to private jets are now revamping their globe-trotting lives.

People will think twice before queuing at an airport and hopping on a plane. Flights will be fewer and more costly. We all now know how much can be accomplished on Zoom and without jetlag or waiting. Even if holiday travel recovers, lockdowns have proven that much business travel is surprisingly expandable.

This is why we might see residency-by-investment (RBI) grow at the expense of citizenship-by-investment (CBI).

• The 1% from the Global South is thinking about not where their next business meeting will be but where they might want to position themselves and their family for a more extended period: they want a “Plan B” insurance policy.
• This typically means big, wealthy, English-speaking countries with a track record of foreign settlement, namely, Canada, Australia, New Zealand, the United Kingdom and the USA are sure to attract new residents.

The long history of famous passive residency-by-investment programs in these regions makes them known quantities. But in recent years, Europe has emerged as a second desired area, ticking several boxes of interest as well, particularly given the privileges provided by the Schengen treaty.

• The COVID-19 travel restrictions have shown that wealthy countries will allow their citizens and those holding resident status to enter.
• As such, a residence card secured through investing in a business, real estate, or bonds is enough to get one across an otherwise closed border.
• For those worried about being stuck, the so-called golden visa programs in places like Portugal, Spain, Greece and Ireland offer options for maintaining a toehold in a country where one might want to spend time when other travel opportunities are limited.

This does not signal an end to citizenship-by-investment. Indeed, citizenship will always confer more privileges than mere residency status alone, but mobility demands are likely to change, with the weight shifting from present mobility and border crossing ease to future mobility and a Plan B. The result will be an expansion of demand for RBI in wealthy and highly-sought countries.

• COVID-19 supplies a test case for assessing the extent to which interest beyond a mere “golden passport” matters.
• In watching developments, it will be essential to keep in mind the impact of market segmentation on both supply and demand. The Caribbean memberships that facilitate visa-free access to Europe may see a more considerable dip in numbers than those countries that grant a much greater bundle of rights as members of the EU or the Middle Eastern options that offer business and residence possibilities.
• The decline in the desirability of mere visa-free access will explain part, but not all of the stories, as costs are important too. The less expensive Caribbean offerings attract a subset of the one percent that has been particularly hard hit by the coronavirus: those with wealth in the low millions, generated through entrepreneurial activities. Indeed, COVID-19 has dealt a blow to their businesses, which they will be shoring up over the next few years.

Under such conditions, citizenship options and other secondary considerations fall by the wayside as expendables that can be cut during tough times. The super-wealthy one percent of the one percent – more likely to splash out millions for membership in an EU country – have taken less of a hit, and their interest in these programs have indeed risen since late 2020, particularly from the USA.

Market Overview

The insurance industry is a major component of the economy by virtue of the number of premiums it collects, the scale of its investment and, more fundamentally, the essential social and economic role it plays by covering personal and business risks.

The global insurance market faces a truly unique moment in its history. The fundamental disruption caused by the COVID-19 pandemic equates to an opportunity for the industry to remake itself in line with new societal realities and market needs.

Maturing markets, tight capital, increasing risk and technologically sophisticated customers are just some of the pressures the insurance sector faces today. The global insurance industry is at a watershed moment. Insurance leaders have witnessed the growing impact of fintechs – financial technology startups – who invest in insurance technology (insurtechs).

Overview of the Global Insurance Sector

The insurance industry is divided into life and nonlife (or general insurance); the value of the market is shown in terms of gross premium incomes. The life insurance sector consists of mortality protection and annuity. The nonlife insurance sector consists of accident, health, property and casualty insurance segments.

World insurance premiums rose 3% in 2019, adjusted for inflation, to $5.1 trillion.

• Nonlife premiums grew 3.5% in 2019, adjusted for inflation, slightly above the growth rate from 2009 to 2018.
• Life insurance premiums grew 2.2% in 2019, faster than the 1.5% rise in 2009 to 2018, adjusted for inflation.

How the COVID-19 pandemic changed customer needs:

• The year 2020 will forever be associated with the pandemic. The insurance industry experienced broad and deep impacts — financially, operationally, strategically — as COVID-19 brought the future forward, accelerating many trends that had been long underway. The effects will be felt for years to come.
• However, surprising developments present opportunities. The dramatic spike in the interest of younger generations in life, health and other protection products is an encouraging demand signal. The demonstrated ability of insurers to move quickly and boldly in upgrading digital capabilities bodes well for the future. Insurers must work to ensure that customers better understand their products if they are to capitalize on the new demand.
• Businesses must concurrently manage three crucial phases of the COVID-19 crisis—respond, recover, and thrive. When the pandemic emerged, insurers responded by taking immediate steps to ensure business continuity and help customers and their communities cope. As they head into 2021, insurers should consider a mix of offensive and defensive actions to accelerate longer-term recovery efforts and pivot to the thrive phase when growth is reemphasized, despite challenging economic conditions.

Tech and insurance industry – INSURTECH

After a long period of slow change, the insurance industry is finally following suit. Leading insurance businesses are starting to better connect risk with customers by partnering with or being inspired by dynamic new startups – insurtechs – across the insurance sector.

• Insurtechs are typically technology-oriented startups that use innovative technical solutions to power new insurance business models. They take advantage of inefficiencies, substituting parts or all of the insurance value chain, and often get between traditional industry players and customers and their risks.
• Insurtechs are also actively engaged in innovating traditional insurance business models.

The global insurtech market size was valued at $ 2.7 billion in 2020.

• It is expected to expand at a compound annual growth rate (CAGR) of 48.8% from 2021 to 2028.
• That means a market worth $ 3.6 billion by 2021 and more than 61 billion by 2028.

Insurtechs and the venture capitalists who fund them are looking to accelerate a shift of the industry away from traditional insurance products toward personal risk management, micro products and insurance-as-a-service. Individuals can employ these to manage their own risk rather than pay whole premiums for insurance companies to care for them.

The increasing need for digitization of insurance services is expected to propel market growth. Simplification of the claims processes is anticipated to drive the change. Insurance companies are focusing on improving communication with their clients and capabilities to implement automation processes. They are also focusing on using these solutions as they use technology innovations mainly designed to enhance the efficiency of the existing insurance industry model. These solutions are helping businesses discover avenues that large insurance companies have less incentive to achieve, such as offering social insurance and ultra-customized policies. These solutions use new streams of information from the internet-enabled devices to price premiums according to observed behaviour.

Insurtech is the usage of innovations particularly designed to make the existing insurance model more efficient. By using technologies such as AI and data analytics, insurtech solutions allow products to be priced more competitively. Insurance companies are widely adopting these solutions to drive cheaper, better, and faster operational results. Hence, the insurance industry is witnessing increased investment in technology.

The outbreak of COVID-19 is anticipated to have a positive impact on the market. Numerous insurance companies are reconsidering their long-term strategies and short-term needs. The COVID-19 and its consequences are accelerating the implementation of online platforms and new mobile applications to meet consumer needs.

Overview of the Automotive Insurance Sector

As per the report published by Allied Market Research, the global auto insurance market generated $740 billion in 2019 and is anticipated to hit $1.1 trillion by 2027, registering a CAGR of 8.5% from 2020 to 2027.

Ø  The rise in the number of accidents, implementation of stringent government regulation for the adoption of auto insurance, and surge in automobile sales across the globe drive the growth of the global auto insurance market.

Ø  Auto insurance is a contract between the insurance company and vehicle owners that protects them against financial loss in the event of vehicle theft or accident. The insurance company agrees to pay the covered amount of the losses in exchange for paying a premium.

Increasing awareness among end-users, introducing innovative technologies and products, and the availability of third-party insurance providers are to deploy substantial traction for the automotive insurance industry over the forecast period. Automotive insurance companies work with software providers to offer big data-based solutions to satisfy the end user’s concerns and untapped market demand during a car-related transaction.

Furthermore, digital technologies and mobile internet are transforming the vehicle industry and the vehicle/automotive insurance industry. The automotive industry is undoubtedly undergoing significant changes that will help increase asset utilization, change vehicle ownership models, and improve vehicle safety, which will eventually impact the global automotive insurance market. Additionally, autonomous technology has made cars increasingly safer, which is expected to reduce vehicle accidents significantly during the forecast period. Moreover, a rise in on-demand transportation and the shifting of liability to manufacturers are some of the factors that are expected to hinder the growth of global automotive insurance during the forecast period.

Key Drivers of Automotive Insurance Market

• Automotive safety has become a significant concern amidst a consistent rise in the number of accidents across the globe due to the high number of on-road vehicles, unsafe driving patterns, underdeveloped infrastructure, and numerous other such factors. In February 2020, according to the World Health Organization, 1.35 million people died every year across the globe, costing a majority of countries around 3% of their total GDP. This economic burden, caused by the growing number of accidents, severely impacts low-income individuals and nations. Consequently, vehicle owners prefer insurance policies to mitigate this financial burden of road accidents, covering health-related and vehicle repair costs post-accident. Thus, a rise in awareness about road traffic accidents and their economic costs drives the global automotive insurance market.
• The emergence of the latest technologies, such as Internet of Things (IoT) and artificial intelligence, has transformed conventional auto insurance policies into usage-based policies. Sensors powered by these advanced technologies are fitted on vehicles to monitor the driving behaviour and pattern of the driver. This data is sent to the insurance company, and based on this data, the premium of insurance is modified. These new telematics-based insurance policies are gaining high popularity, hence fuelling the automotive insurance market across the globe.

Insurtech in the automotive sector:

• Aside from health and life coverage, there can be few areas more appropriate for insurtech to assert a benevolent – and mutually beneficial – influence on the behaviour of policyholders than in the area of auto coverage.
• Telematics offers much more than access to coverage for high-risk groups above and below a certain age. It can reward all policyholders with lower premiums if they are prepared to reduce risk by adjusting their behaviour behind the wheel.
• As these systems are developed, telematics will likely have an increasing role to play within underwriting and pricing. The nature of insurance is changing globally, as individuals tend to lease or rent cars and are offered a whole of life service. This is expected to include auto coverage automatically as manufacturers operate like a distribution platform.

Connected devices are becoming a prominent part of our daily lives, and many businesses are trying to figure out how they can exploit this trend to create a deeper relationship with their customers. Motor insurers are not immune to the changes that are happening, primarily as they operate in an increasingly competitive market.

• Deloitte has recently conducted a detailed analysis and report, which estimates that in Western Europe, the market share for digitally-enabled motor insurance by 2020 could exceed 15 billion Euros. From this study, they concluded that the “big-switch” is coming; digitally-enabled motor insurance is a crucial differentiator in a frequently commoditized market.
• Historically, the target of insurers for their telematics product has been young drivers paying high premiums. However, these customers are not the only group who may be interested in digitally-enabled motor insurance.
• The influence of data privacy on purchasing decisions by customers is quite significant but varies across Europe. Interestingly, customers appear to be much more comfortable sharing driving data than social media data. This suggests that at present, it may be difficult for insurance companies to collect and use social media data, despite its potential for creating new contact points with existing customers. Unsurprisingly, price is the most significant driver of customer’s purchase decisions.

Through the launch of value-added services linked to digitally-enabled motor insurance products, insurers finally have the opportunity to differentiate their products and engage their customers in new ways, thereby helping to change their perceptions of insurance products and providers.

There are clear signs that customers across Europe would value a telematics offering!

The “Connect Insurance” Channel opportunity

The COVID crisis has started changing the automotive insurance industry:

• 81% of drivers in the UK have changed how much they drive because of COVID-19. Across Europe, the pandemic has also modified the reasons why people move, their driving patterns, and the nature of the pool of drivers on the road. The riskier drivers are now disproportionally driving more; a quarter of them are young drivers.
• As a result, previous models are not representative of commuters’ risk during the succession of lockdowns. Without individual driver data, insurers’ traditional risk proxies are no longer predictive and may not return to the utility.
• The COVID pandemic is pushing people towards transacting via online channels, which is now the prime transaction method for up to 63% of the drivers.
• The appetite for connected insurance models has increased sharply since the pandemic started in Europe, with 65% of the population now likely to make the switch. In January 2020, “only” 49% of European drivers suggested it be possible to try usage-based insurance.
• In terms of the value proposition and pricing models, the survey demonstrates a considerable shift away from “old school” discount-based telematics (-58%) to Pay-As-You-Drive (+145%) models.
• The appetite for Value Added Services has also progressed, with safety-related options such as rewards for safe driving and emergency roadside assistance at the top of drivers’ wish lists. Claims assistance using automatically generated reports was a close second.

Consumers’ interest in telematics is at an all-time high – and growing. The COVID crisis brought home the benefits of telematics to many drivers. Since then, a flurry of positive articles has reinforced that telematics is the best way to save money on insurance.

The market and consumers are becoming more and more mature and ready to switch!

• The original idea behind using telematics data in the insurance sector was to monitor a vehicle’s usage to price insurance based on the policyholder’s driving behaviour. Today, it allows insurance companies to reward those who opt into safe driving or distance-based programmes based on risky behaviours, scoring, and GPS monitoring.
• As technology evolves, it allows for new, more robust business models. This has been particularly noticeable since smartphone-centric insurance has introduced a brand new direct and constant communication channel between the insurer and the insured.
• Together with frequency and richness of interaction, connected insurance brings another benefit. By selecting the risks, influencing driving behaviour, and using the crash data efficiently during the claims handlings process, carriers are able to accelerate the claims management and benefit from increased efficiencies.

Connected insurance provides the drivers with the flexibility they now need since they drive less or differently. At the same time, it provides insurers with the information required to price risk appropriately.

Market Overview

The automobile has long been regarded as one of the most important innovations in history, significantly changing people’s lifestyles, quality of life, and productivity. At the same time, the freedom to move, social status, and the fun of driving have fostered an automotive culture, making the automobile a particular consumer product rather than a simple transportation tool.

Transport is critical for the economy. It creates growth opportunities, generates jobs, facilitates trade and realises economies of scale. Mobility is central to the whole of society. It allows people to connect with places and shapes how we live our lives. In the last twenty years, social changes have significantly altered how and why we use the transport system; shifts will likely be even more notable over the next twenty years.

Changes such as the growing, ageing population will meet technological advances in electric power, digitalisation and automation. These technologies will bring opportunities, offer fresh innovation to existing needs, and radical new approaches. However, they will also bring challenges. Realising the full potential of technology requires us to consider how users’ travel behaviour will respond to it and how all of society and our economy can benefit. To be truly transformational, we need to view transport as a system: to consider it as a whole. The future of transport needs to balance a wide range of considerations. Capacity has a role to play, but it must be linked to making travel more sustainable overall, be this through lower emissions, less travel or better relating our journeys to housing and work.

The global automobile industry is on the brink of a vital transformation. Technology is driving this shift, shaped by demographic, regulatory and environmental pressures.

Overview of the Electrical Vehicles (EV) Sector

Before the COVID-19 pandemic shook up the automotive industry – along with every other industry – electric vehicles were moving steadily into the spotlight.

The combined annual sales of battery electric vehicles and plug-in hybrid electric vehicles tipped over the two-million-vehicle mark for the first time in 2019. EVs staked their claim on a 2.5% share of all new car sales last year.

In terms of volumes and trends:

• Total EV sales are growing from 2.5 million in 2020 to 11.2 million in 2025, then reaching 31.1 million by 2030.
  • EVs would secure approximately 32% of the total market share for new car sales.
• Europe has now passed China to lead the world in EV sales, with 1.4 million EVs sold in 2020 representing a 137% increase from the previous year.
• It is also leading the world in the pace of EV adoption, hosting 9 out of the top 10 EV markets by penetration rate led by countries in the Nordic region.
• It is projected that annual European EV sales will reach 8 million by 2030.
• Experts expect that by 2030 China will hold 49% of the global EV market, Europe will account for 27%, and the United States will hold 14%.
  • The share of new car sales taken up by EVs will vary considerably across markets.
  • China should achieve a domestic market share of around 48% by 2030.

In terms of value and trends:

• The global electric vehicle market was valued at $ 162 billion in 2019 and is projected to reach $ 803 billion by 2027, registering a CAGR of 22.6%.
  • Asia-Pacific was the highest revenue contributor, accounting for $ 85 billion in 2019, and is estimated to reach $ 358 billion by 2027, with a CAGR of 20.1%. North America is estimated to reach $ 194 billion by 2027, at a significant CAGR of 27.5%.
  • Asia-Pacific and Europe collectively accounted for around 74.8% share in 2019, with the former constituting approximately 52.3% share.
  • North America and Europe are expected to witness considerable CAGRs of 27.5% and 25.3%, respectively, during the forecast period. The cumulative share of these two segments was 40.1% in 2019 and is anticipated to reach 51.0% by 2027.

What is behind and driving this massive growth market:

• Consumer sentiment:

Consumer demand will fuel the growth of EVs. As the barriers to adoption are rapidly removed, EVs are increasingly becoming a realistic and viable option.

From 2018 to 2020, there were some noticeable changes in consumer attitudes toward EVs. Concerns over the cost/price premium have diminished in every country. Driving range has remained the number one concern in Germany and became number one in France, but there are now fewer consumers citing it as a concern in those two markets. Elsewhere, the lack of charging infrastructure has become the top priority for consumers, reflecting the possibility that they are starting to see EVs as a realistic option and are considering the practicalities of ownership.

Over the next few years, experts expect some barriers to be completely removed. EVs’ driving range is already comparable to that of ICE vehicles; price has already reached parity if you consider subsidies in various markets and total cost of ownership, and the number of models available is increasing.

• Policy and regulation:

Government intervention continues to play an essential role in driving EV sales, as shown by the successes in Norway, fluctuating sales in the Netherlands and changing fortunes of the Chinese EV market.

Not only are there economic benefits for states that support a transition to electricity, but the positive environmental impact has made the widespread adoption of EVs a necessary step toward achieving climate-change goals, such as those of the 2015 Paris Agreement. Several policies and regulations are helping encourage the growth of EV adoption.

• OEM strategy:

In the past year, some prominent OEMs have announced strategic commitments to EVs. New models have been announced, production targets increased, and sales targets moved forward and multiplied. The impact of the investment and targets will represent a seismic market shift over the next decade regarding the availability and affordability of models.

According to statistics cited by the European Federation for Transport and Environment, Europe should expect 33 new models in 2020, 22 in 2021, 30 in 2022 and 33 in 2023. This means that EV models available in the EU will surpass 100 in 2022 and reach 172 in 2025. In the United States, IHS Markit predicts 130 available models by 2026, offered by 43 brands.

The top 29 OEMs already plan to invest more than $ 300 billion over the next 10 years to develop capacity production further, and all of them make the claim they can do so profitably. Assuming that global weaning from fossil fuels continues, automobiles will contribute fewer greenhouse gases on a “well-to-wheel” basis over time.

Achieving price parity with, or even savings over, ICE vehicles will play a big role in speeding up EV adoption, especially as model ranges and marketing priorities adapt to manufacturer emission targets. Even with more OEMs offering affordable EV models, consumers are still unwilling to pay a premium for an EV instead of its ICE equivalent. However, experts expect the existing price premium associated with EVs to be consigned to history sooner rather than later.

• Role of corporate companies:

Experts see an increasingly important role for corporates to support EVs’ transition, using the three factors highlighted above to their advantage.

Sales of new cars to businesses represent a significant proportion of all vehicles sold.

Overview of the Technology associated with the EV Sector

Compared to internal combustion engines vehicles, EV have a significant advantage – battery technology developments are faster than those of the engine technology on gasoline-petrol based cars.

In addition, the trend of packing electronics in today’s automobiles shows that innovations in electronics will outpace other innovations. The amount of electronics in an EV is high compared to conventional vehicles. It offers opportunities for more innovations. The electric car of the future will be a proper computer on wheels and will change the automobile‘s character.

As an example:

The major shift within the automotive industry due to the growing part of EV is, therefore, the technology and innovations embedded into the vehicles.

With software and other technologies taking the lead, it’s no surprise that consumer tech companies are entering the automotive world. While a car may not be a mobile phone, these businesses’ focus on design, ease of use, automated assistance and battery life will bring new kinds of innovation to the field. One catalyst for tech innovators to move into the automotive industry now: electric vehicles have just 1/3 of conventional vehicles’ parts, lowering the barriers to entry.

The Internet of things has demonstrated how connecting everyday devices to a network could transform what we can do with them. According to several Tech specialists and automotive experts, the Internet of cars will do the same. Connected vehicles, communicating with each other and with the larger world, will not only reduce accidents and ease traffic, but they will also have powerful effects beyond the auto industry. Insurers, for example, will have new ways to monitor driver behaviour, reward good drivers and distribute costs to bad ones. And ride-sharing companies can better connect idle cars with the customers that need them.

Ridesharing may be a mixed blessing for the auto industry. The majority of vehicles worldwide are used only to commute or for short trips during the day, leaving them idle 95% of the time. Connected cars—especially self-driving ones—could also change the way people use their drive time.

The “City Car” segment opportunity

There is a clear market window for low cost, electric city cars in Europe.

Improvements in battery technology have resulted in small and light electric vehicles (LEVs) appearing on the market in Europe since 2015. However, their market share is still comparatively small due to their excessive price.

Cities today face problems resulting from increased mobility needs, which are often still tied to private car ownership and auto-centric transport infrastructures that have grown historically.

• This situation is compounded by urbanisation and population growth in many cities.
• Therefore, cities struggle with bad air quality, high noise emissions, a lack of space, and structures with low attractiveness for public spaces.
• The European Commission estimates urban mobility to be responsible for 40% of all European road transport CO2 emissions, which shows the importance of sustainable urban transport for climate protection.

A key element in urban mobility planning for many cities today is promoting ecologically, socially, and economically sustainable mobility options. Light electric vehicles (LEVs) are becoming an extensive element in sustainable mobility concepts within urban and rural areas.

• LEVs require less energy and resources for production and operation than cars and occupy less space in stationary and flowing traffic. While LEVs have already reached a considerable market share in Asia, LEV sales in Europe are still meagre.

City cars have historically been the low cost, entry-level vehicles in Europe, representing a consistent 8.5% of annual car sales on average (1.2 million vehicles per year).

• This segment has been dominated by OEMs such as Fiat, Renault and Volkswagen, with European brands holding 73.2% of the city car market followed by Japanese (13.2%) and Korean (11.3%) brands.

New European emission standards have made this an unprofitable segment for most European OEMs, leading them to shift their A-segment vehicles to electric or discontinuing these models altogether.

• Some OEMs have also discontinued electric versions of their models, like the Volkswagen e-Up and the Skoda Citigo e iV, to focus on larger, more profitable vehicle segments.
• To sum-it-up, Lower cost EVs with premium styling and a quality digital experience in the A-segment are not readily available in Western markets.

On top, very important to realise that European car buyers have a strong preference for vehicle brands with a European country of origin.

Due to the higher prices of electric vehicles, early adopters of EVs have skewed affluent, with 60% of buyers having an average household income of over € 100,000 per year.

Only 13% of prospective car buyers in Europe are willing to pay more than € 2,000 more for an electric car vs a comparable petrol model.

• This makes the current electric city car segment priced out of reach for many of their target buyers, even when factoring in government cash incentives.
• For younger, more cost-conscious city car buyers, higher prices in the market will lead them to either forgo a new car purchase or shift to car-sharing or ride-hailing to meet their mobility needs.

Conclusion:

We live in a time of unprecedented change in the transport system. Changes in the nature of working and shopping, new technologies and behaviours – such as automation, vehicle electrification and the sharing economy – are already having an impact on how the system functions, while the intersection of the physical and digital realms is changing how transport is planned and used. These developments bring exciting possibilities which, if grasped, will bring significant social benefits.

The challenge facing cities throughout Europe concerning climate change, air and noise emissions are substantial.

Electro-mobility and small electric vehicles provide a significant opportunity to address the negative externalities associated with the internal combustion engine without constraining the vital role that vehicles play.