The aftermath of world events such as Brexit and the result of the US election are threating the notion of globalisation and ‘unsettling’ the trust and corporate services sector, according to a new report by Vistra.
The report, ‘Vistra 2020: The Uncertainty Principal’, had almost 600 respondents from a wide geographical span and found that globalisation, privacy and technology, and the uncertainty surrounding these factors, attracted the most attention as a result of the world’s recent geopolitical, geostrategic and economic shifts.
Group managing director of the company formation division of Vistra, Jonathan Clifton, commented: “Significant shifts surrounding the industry have been witnessed globally, causing a feeling of consistency to give way to uncertainty. Globalisation has felt the effects of this considerably and is slightly under threat according to over 70 percent of respondents.
“Large-scale globalisation dates back to the late 19th century and has underpinned economic growth across the globe since this time. For globalisation to now be under threat inevitably unsettles the trust and corporate services industry, an industry that hinges on cross-border transactions and international supply chains, as well as free trade and investment.”
The sentiment of anti-globalisation has strengthened with time, and the US election, Brexit and the popularity of political figures in Europe such as Marine Le Pen and Geert Wilders are all indicators of a ‘retreat to more closed economies’. Vistra’s report also suggests the sentiment threatens the industry and could lead to more regulations hindering cross-border flows.
Mr Clifton added: “The requirement for increased regulation and transparency is sweeping across the industry. Dozens of countries will soon have to follow the Common Reporting Standard with several other regulatory changes already putting downward pressure on the industry. As new regulation is introduced with the intent to create complete transparency in the industry, we all experience an erosion of privacy. This brings into question whether privacy and transparency can co-exist, or must we forgo one to have the other in full force.”
Furthermore, the report observed that privacy is still considered a leading business driver, but a ‘systematic erosion’ of privacy in pursuit of tax gains is evolving across jurisdictions globally. The industry has also become increasingly dependent on technology, the report found, and while Mr Clifton said technology is the “dominant driver” across all sectors, it is also “putting privacy most at risk”.
Almost 60 percent of respondents think that technology will disrupt the industry with innovation that will lower costs and “fundamentally change business models” by 2020.
Mr Clifton continued: “The industry has entered a new era, virtually unrecognisable from previous periods. Obstacles are presenting themselves, forcing us to look carefully at the advantages of transparency versus privacy whilst also questioning the uncertainty surrounding the future of globalisation. However, there are many other factors that will continue to contribute to the future of the industry, but whatever trends develop; we at Vistra will continue to conduct this research to stay abreast of the market.”
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