We live in the ‘smart’ age, surrounded by smartphones, smart TVs, and even smart doorbells. Innovation has now become the mantra with dominators, disruptors, and enablers orchestrating significant change across ecosystems. Within this, there are a few innovative ideas and themes that we believe could thrive in the years to come. Some of these include:
Semiconductors:
Can you imagine a life without electronic devices? There would be no smartphones, no TVs, no advanced medical diagnostic equipment, no automobiles, and even no computers. Powering all of these and more are tiny microchips called semiconductors. Monikered as the brains of modern electronics, the role of semiconductors in the modern economy is set to expand even further as we migrate to an Internet of Things (IoT) environment where physical devices of all kinds will be connected to the internet and enable seamless and comprehensive data sharing. Based on an IDC study, the volume of global data will increase 10x to 163 zettabytes (or one trillion gigabytes) by 2025 with the adoption of 5G. This can lead to more demand for integrated chips (ICs) as data storage, analysis, and the process will play a central role in 5G and IoT infrastructure. Additionally, semiconductors are also a key component of electronic systems and are now increasingly being used in intelligent, self-driving cars. Growth in the automobile sector will inevitably drive further demand for semiconductors.
Software:
The relevance of seamless connectivity, customisation, and data exchange in our ecosystems was amply underscored by the COVID-19 pandemic which brought to fore the importance of software services and its myriad offerings like cloud computing, Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). While cloud computing is undeniably transforming connectivity between people and businesses on a global scale, the pandemic served to act as a catalyst for its widespread adoption. For example, companies with a well-established cloud infrastructure found it easier to migrate to a work-from-home environment and ensure business continuity. As a result, the sky is going to be the limit for cloud demand. The virtual infrastructure offered by the cloud enables people to store data, collaborate, share, and build solutions seamlessly and in a secure manner.
Internet and Interactive Media:
Not only have the ‘ways’ we interact with our friends and peers changed but also ‘where’ we interact has undergone a transformation. The internet and interactive media are blurring the boundaries between the virtual and physical worlds and bringing large swathes of people under their sphere of influence. Today, we are witnessing a sharp growth in social media interactions along with increasing consumption of OTT and gaming offerings. This is creating new business avenues for internet companies and can enable them to expand the overall addressable market by more than 5x – from USD 240 bn to USD 1250 bn. Such is the potential of social media that increasingly, B2C companies are leveraging social media solely for business without any physical presence - for example, business through Instagram pages.
Biotechnology and Healthcare:
Cutting-edge innovations in the field of biotechnology can have a significant impact on human health, agriculture, and the environment. New techniques founded in molecular biology and genetics research are enabling scientists to manipulate gene code, find solutions to medical conditions and produce desirable results. Availability of adequate healthcare is one of the key building blocks of a robust society and biotechnology and the use of Artificial Intelligence (AI) and robotics in healthcare can significantly elevate the healthcare ecosystem. For example, AI algorithms are being used to assess the pain levels being experienced by people who have sickle cell disease by just using their vital signs and accordingly the most suitable pain management therapy is being prescribed. With newer frontiers being explored in the field of biotechnology and healthcare, the market for such offerings is set to grow further. For example, according to research, the market for surgical robotics generated USD 5.46 billion in 2020, in terms of value, and is estimated to grow 3X and reach USD 16.77 billion by 2031.
E-commerce:
This is perhaps one of the most visible forms of digital transformation with radical application of new technologies to traditional business models. However, the growth in e-commerce, although seemingly significant, is still quite nascent. The share of e-commerce in global retail has increased from 14% in 2019 to 17% in 2020, indicating high room for gaining further market share. Further, there are several factors that are lining up to precipitate growth in the industry. Key drivers are increasing digitisation, ease of access and availability, and potentially more competitive pricing. E-commerce isn't just a fad, it's a trend that is likely to endure and create investment opportunities for companies that can leverage this opportunity.
Fintech and Mobility:
The pace of innovation in the fintech space is truly unprecedented. From disrupting traditional banking by launching neobanks to enabling seamless cashless transactions and peer-to-peer lending, fintechs are blazing ahead with all engines fired. However, if you look closer you will see that fintechs have merely begun to scratch the surface in terms of adding value across the financial services spectrum.
Take for instance, DSP's own Jarvis, a custom-built in-house evidence-based proprietary fundamental analysis tool. As you well know and see in the world around you, there is no dearth of data available today for investment analysis. But organizing this scattered data and converting it to wisdom and actionable insights? Here, a gap certainly exists. DSP is building Jarvis with the aim that this technology is not just able to quickly analyse large, complex data sets from companies instantly, but also identify patterns and provide ideas to fund managers that adhere to their own respective investment frameworks.
While newer technologies like blockchain or Distributed Ledger Technology (DLT) are becoming a part of the narrative, their full potential within the financial services space is yet to be realised.
Similarly, even in the field of mobility, more specifically in reference to electric vehicles, we expect to see increasing acceptance and rise in market share.
Forecasting what might or might not work tomorrow is always a challenging task. However, if you have your ear to the ground, you can always pick on subtle but distinct trends that are destined to eventually roar.
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