Change is definitely changing – the future is not more or less of the same thing. The future will contain bucket loads of transformation – a genuine qualitative shift is coming down the pipeline whether you’re ready for it or not.
In the next 2- 10 years expect to see the following:
- Terrorists will mess with our financial mojo in NZ. Thanks to legislation designed to ‘flush out’ terrorism funding, it’s now more complicated to do anything with your money. Opening a bank account, purchasing a home, popping your pimples – soon you’ll have to provide two forms of ID and show where the source of your wealth has come from for everything you do. Financial advisers have been dealing with this for a while but your solicitor, accountant and even real estate agents will come under the influence of AML (anti money laundering) and CFT (counter financing of terrorism) shortly. What to expect? Higher fees with your professionals and slower response times as they have larger reporting responsibilities.
- The rise of AI. Artificial intelligence is starting to become a genuinely useful tool for banks already. Every transaction you make tells a story, and that story is being read right now by someone looking to sell you something. Your car is also likely going to play a very different role soon – take the kids to school, do some shopping, pick you up from work – all performed by your fully autonomous little helper. Siri, meet Tesla. Why this is important – this will make commuting in Auckland easier. Really? What impact will that have on house prices I wonder? What about the value of carparks in the city when they’re no longer required?
- Deflation is coming – and it will transform your world. AI, robo-advice, AAS, 3D printing to name just a few disruptive technologies, may make you redundant – it most certainly lead to pay decreases for the majority of the population. That, coupled with a decrease in commodity prices as we reap the benefits of automation, could easily create a deflationary spiral. How would you cope if you had a serious pay cut?
- Death of the interest rate – Peak interest rates have been and have passed – that’s right, this could be the new ceiling. Great, considering the above point!. The longer term trend is for interest rates to trend towards 0%. Quantitative easing and the demographic ‘push’ of money from retiring baby boomers will have a massive impact on our cost of borrowing funds.
Putting it all together – how does this affect you and your family? Probably not much to be honest – All the more reason to become the one who’s making decisions, instead of waiting to see who goes first. The transformation that’s coming could also do one thing that none of us can currently imagine – property prices will go through hyper-inflation.